Report finds mixed fortunes for recruitment industry

The annual recruitment industry survey, produced for the Recruitment and Employment Confederation (REC), has shown that despite overall growth in the recruitment industry, the last year was a tough one for the sector.

The survey found that total recruitment industry sales grew by 5.9%, the number of staff employed in the industry had declined by 7.7%. In addition permanent recruitment fees had contracted by 8%, and while temporary recruitment market grew to reach 7.1%, the margins were down by 0.7%.

Economic conditions have had a significant impact on the jobs market in the last 12 months, which has driven down the value of sales in the permanent market, and made the temporary market much more competitive, which in turn has driven down margins.

Sales of £24.24 billion were created by the recruitment industry in 2001/2 with 1.336 million temporary or contract workers on the payroll in any given week. Recruitment agencies placed 519,761 people in the same period into permanent positions, an increase of 2.6%. However it is evident by the fall in turnover that the value of each permanent placement has dropped.

The survey also suggested that the industry anticipates low growth in the year ahead. Respondents predict an increase in industry turnover of 4.5%, although turnover in the permanent industry is expected to grow by 6.1%. Growth in the temporary/contract business is expected to be lower than in 2001/2 at 4.4%.

Commenting on the survey, Tim Nicholson, Chief Executive of the Recruitment and Employment Confederation said: "The survey demonstrates that the recruitment industry continues to of huge value to the UK economy, both in the services it provides and the revenue it generates. It is also clear that this has been a tough year for our industry. Further margin squeezing as well as additional regulatory costs contained with the Government's legislative pipeline may affect our ability to find job opportunities for work-seekers on the extremely large scale achieved in 2001/2, despite the difficult economic conditions. We can ill afford further regulation, either at a European or UK level which might stifle growth further."

The REC is the association for the £23 billion private recruitment and staffing industry in the UK. The organisation numbers 6,000 recruitment agencies and over 8,000 recruitment consultants in its membership.

The survey includes data from 645 companies, covering 2,219 branches, out of an estimated industry total of around 13, 700.

(SP)