The British investment-banking industry is underpinned by entrenched elitism that blocks people from lower-income backgrounds winning jobs on the basis of ability, according to a report by a government advisory body.
Recruiters seeking polished candidates who speak and dress a certain way often discriminate against applicants on the basis of details including shoe color and where they went to school, the report found.
Half of the City of London’s top investment bankers are educated at fee-paying schools, even though less than 7 percent of U.K. pupils go to a private school, the Social Mobility Commission said in the study published on Thursday. In private equity, seven in 10 new hires over the past three years went to non-state schools.
“Bright working-class kids” lose out because they don’t know “arcane culture rules,” Alan Milburn, the commission chair and a former Labour lawmaker, said in an e-mailed statement. “Some investment bank managers still judge candidates on whether they wear brown shoes with a suit, rather than on their skills and potential.”
Recruiters, particularly within corporate finance and mergers and acquisitions, looked for characteristics summarized as “polish” that were less obvious to lower-income applicants, including certain accents or knowledge of “opaque” dress codes, researchers found. Work experience was often dependent on social networks and new recruits were dominated by graduates of elite universities such as Oxford and Cambridge.
To break the so-called class ceiling, employers should collect data on employees’ social and educational backgrounds to help cast a wider net to look for talent from state schools, the commission said. Some investment banks are already making progress on improving social mobility, the report said.
The government may be in a position to influence the hiring practices of two of the U.K.’s largest lenders, as it still owns about 9 percent of Lloyds Banking Group Plc and 72 percent of Royal Bank of Scotland Group Plc.
The report coincides with the first meeting on Thursday of a committee convened by Prime Minister Theresa May to tackle social inequality. May sought to woo “ordinary working-class” families in her first speech on assuming power in July, and her office said the new panel will “make Britain for everyone, not just the privileged few.”
“You might have a job but you don’t always have job security,” May said in a statement. “You may have your own home, but you worry about paying a mortgage. You can just about manage but you worry about the cost of living and getting your kids into a good school. So while we continue to help the worst off we will also be focused on the millions of people for whom life is a struggle and who work all hours to keep their heads above water.”
The committee will bring together the heads of nine government departments, including the chancellor of the exchequer, the home secretary and the education secretary.
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