The global battle for talent in finance will determine how the future looks for international financial hubs such as Luxembourg, said Nicolas Mackel, Chief Executive Officer of Luxembourg For Finance in a podcast interview with Investment Officer. Those centres that manage to attract the best individuals with skills in digital or sustainable finance face a promising future.
“We need to attract professionals from abroad,” Mackel told Investment Officer Luxembourg in an interview. “We are in a competition for these international professionals with cities like Singapore, New York, Hong Kong, London, Paris. It’s not a given that they may consider Luxembourg as an appealing option.”
Mackel, who took the helm at Luxembourg For Finance in 2013, is often described as the international ambassador of the Grand Duchy’s financial community. His earlier postings at Luxembourg’s Permanent Representation to the EU, as Deputy Chief of Mission at Luxembourg’s Embassy in Washington DC and as Consul General in Shanghai, have provided him with the typical international perspective for which Luxembourg is well-known.
Extra effort required
Luxembourg for Finance is the development agency of Luxembourg’s financial industry. “Our remit is to help explore new markets for the Luxembourg financial industry in a geographic sense. China, Latin America, Middle East, wherever. Or in a thematic sense as in sustainable finance or digital assets.”
Mackel makes it clear that Luxembourg is fully aware that it needs to make an extra effort to bring in talent from abroad. Young professionals who aspire to an international career in a global financial capital do not immediately think of a land-locked country between France, Germany and Belgium. That said, in Europe’s ranking of financial capitals, the Grand Duchy ranks sixth following London, Paris, Zurich, Geneva and Frankfurt.
“What we need to do is to look at a mix of measures that goes from quality of life in Luxembourg, to culture in Luxembourg, to connectivity, to many different things that help make Luxembourg an appealing option.”
Advantages underlined
“Some people don’t want to live in a mega city and prefer to live in a small city. Luxembourg has many advantages. If you only look at the size, it may be small but it is a capital. It is a European capital and it is an international financial centre. So it has all the advantages of a small city and the advantages of an international city international financial centre. That definitely is the case.”
Luxembourg’s financial sector employed 51,623 people at the end of the second quarter last year, according to Luxembourg national statistics bureau STATEC, on a total workforce of about 442,000 people. The number of finance jobs has increased about two to three percent per year for the last decade, Mackel said. If jobs growth continues even at a humble two percent, it suggests Luxembourg may have to find more than 10.000 financial specialists in the years up to 2030. Hopes are high now for new jobs in digital and sustainable finance.
“Digital jobs, and in particular jobs in sustainable finance, are helping to bring back young people to the finance industry,” said Mackel. “The question of talent is a question that every financial centre is debating. The financial industry as such is being challenged by the likes of tech companies. Younger generations want to have a meaningful job rather than a well paying job only. They don’t mind being well paid. But they now want more specifically, a meaningful job.”
‘No quick fix’
“Luxembourg, of course, is in the process of addressing this issue around talent. We submitted to the government a year ago a report with recommendations on how to go about this. Most factors are, of course, structural, so there isn’t a quick fix to it,” he admitted.
Another essential action for Luxembourg to demonstrate its leadership in finance is to invest in specialised training. Mackel said this could significantly boost the added value of the services provided by financial professionals to clients across Europe and the world.
“If we want to be a centre of excellence for multi-jurisdictional business, if we want to be a leader in sustainable finance, if we want to be a leader in digital financial services, if we want to continue climbing the value chain, we need to invest massively on a wholly different scale into training,” said Mackel.
“That is the key to it,” he said. “I hope every politician will understand that that is also a way of giving people the tools to find their place in the labour market. It should be a slam dunk.”
Multicultural approach defines ecosystem
Luxembourg’s financial sector in recent decades has transformed itself into a leading European centre for investment funds and private banking with institutions that distribute financial products in multiple countries. Mackel said Luxembourg’s multicultural and multilingual approach defines its specialised financial ecosystem.
“It’s exactly this multi-jurisdictional activity and multi-jurisdictional expertise that is Luxembourg’s added value for the European financial industry. If you are a French or German or Italian asset manager and you want to set up a fund that you distribute at home, you don’t need Luxembourg. But if you want to set up a fund that you will distribute to Spain, Sweden and the Netherlands, that is where Luxembourg’s value really comes in.”
“This is where you find an ecosystem that helps you set up these products in a way that is compliant with the requirements with the regulation of the different markets. And not only that, also with the culture of these different markets, because the people who work here know these markets, and can help you do that out of one, specialised hub.”
“So we do not take business away from the likes of Paris, Frankfurt, Amsterdam or so on. We are complementary. It’s this added value that they find here that helps them grow their international business. That is what Luxembourg is.”