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Interim Market Report 2011 - Internal Audit Market Analysis

Internal Audit
Jun 2009
Dec 2009
Jun 2010
Dec 2010
Jun 2011
New vacancies
29
46
68
73
67
Closing vacancies
17
24
35
38
42
Candidates registering
226
274
296
276
227
Defensive registrations
23%
19%
15%
14%
16%
Overall Salary increase
11%
10%
14%
15%
14%

The internal audit recruitment market is currently experiencing patterns of supply and demand similar to those that existed prior to the recession. Whilst demand recovered strongly in 2010 it was heavily biased towards the financial sector and specifically the banks. One bank having 25 vacancies, whilst potentially flattering the total aggregate number of vacancies, does little for the wider recruitment market. Not withstanding developments in the public sector, the internal audit recruitment market is currently enjoying the broadest level of demand in over three years. The perennial problem of where the skills and experience to meet this demand will come from remains.

Vacancies

At 67, the number of vacancies has fallen back from the level achieved in the second half of 2010 and is below the 68 achieved in the first half of the year. Vacancies are also below the level that was usual prior to the recession. However, whilst the number of vacancies is down, outside of the public sector, the pattern of demand is more evenly spread across the economy. Given the economy is experiencing sub-trend growth it is not surprising that the number of vacancies is below the level that was considered usual prior to the recession. Corporate investment in the UK, which has historically underpinned employment growth in internal auditing, has fallen back from the already low levels of 2010. Given this, it is unlikely in the short term that demand from UK centric internal audit departments will climb further. However, for those multinationals that base their internal audit departments in the UK, which still make up a significant proportion of the aggregate demand for internal auditors from industry and commerce, a weak pound makes the UK a relatively cheap location to base international internal auditors. Whilst we have no evidence to confirm this has been a factor in overall demand, is does provide some reassurance that at least in the short term internal audit jobs are less likely to be lost in the UK.

The number of closing vacancies has risen from 38 to 42. It is indicative of two factors that are at play in the recruitment market. First, companies are being more cautious about their recruitment. The immediate effect of this is that they will only recruit those who closely meet their requirements. Secondly where are the internal auditors to fill the available vacancies? In spite of the subdued state of the economy a chronic shortage of internal auditors has already developed. This leads us to yet again conclude that the shortage of internal auditors in the economy is structural rather than cyclical.

Registrations

At 16% defensive registrations remain low. If registrations from the public sector were excluded then defensive registration would be under 10% and at historic lows. As we have previously reported redundancies were low during the recession and if internal auditors believed they were not going to be made redundant then, it is even less likely they will now.

At 227 the number of candidate registrations has fallen. Many internal auditors who had postponed looking for a position during the recession entered the recruitment market during 2010. The number of registrations is now more reflective of the long term average and may be even more subdued as a consequence of the economic backdrop. For most internal auditors, a move into the recruitment market is a statement of confidence. Given the number of jobs the economy has recently created it is not misplaced. However, nobody can doubt the potential risk of a further economic setback precipitated by the simmering European sovereign debt crisis and other potential catalysts that remain firmly in the media focus. On current trends we do not expect the number of candidate registrations to significantly rise in the later half of 2011.

Salaries

The average salary increase achieved by internal auditors changing jobs fell back to 14%, and remains close to its long term average. Whilst the bargaining power of internal auditors has risen during the last six months, the number of internal auditors securing positions in industry and commerce has risen relative to those securing positions in banking and financial services. Given the more competitive job market for internal auditors in the City, salary increases gained on changing employer in financial services have historically been higher than in commerce.

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