Stuart Gentle Publisher at Onrec

Recruitment firms sense changing UK economic climate - 05/2001

Low unemployment figures are masking instability in the jobs market

Six in ten of recruitment agencies fear a decline in their sectors and are expressing concern about skills shortages. According to a new survey, four in ten agencies believe an economic downturn is poised to hit the jobs market.

These conclusions are based on a nationwide survey (Recruitment Trends 2001) of 500 managing and financial directors of recruitment firms, all with a turnover of between 2 million and 100 million plus, servicing a wide range of fast developing industries including IT, secretarial, banking and financial, telecom, legal and media.

Commenting on the survey results Gary Clark, managing director of the LSM Group, which commissioned the survey, said: ìThe skills shortage is combining with fears of economic decline to make for a restless employment scene. Overall, the potential for UK businesses cannot be fulfilled due to an ongoing lack of resource. Itís now a sellers market for skilled people who can pick and choose their roles, more than ever dictating conditions. New laws protecting temporary employee rights give strength to the position of jobseekers. But the ëhire and fireí mindset that comes with having the increasing levels of temporary staff indicated by the survey adds to the volatility of the employment scene overall. Temporary jobs have become a barometer of the changing conditions because they react faster to the economic climate than the permanent posts that they are increasingly replacing.î

Most recruitment agencies are not adapting their own working practices to absorb change. Half of them plan to increase their administrative head count, with some already numbering over 100. Six in ten acknowledge that outsourcing frees more time to focus on core activities, but the same percentage claims not to be interested in outsourcing, many because they fear loss of control.

Independent psychologist Dr Lewis analysed the survey findings on behalf of LSM: ìAt a critical time in the success of their company, instead of focusing on what they do best, which is finding round pegs for round holes, the research suggests that many agencies are spending too much time on administrative functions that would be far better outsourced.î

When asked what is important to retain good candidates, around a half (46%) of agencies expressed a need to expand their own knowledge base or improve their employeesí communication skills, and a quarter (27%) consider further training for candidates to be the key.

Dr Lewis continued: ìCompanies are still quite inward looking when it comes to facing up to the changes that will inevitably be forced upon them. Almost half are still desperately trying to provide regular work for candidates (45%) and find jobs that match candidatesí skills (61%) to retain good candidates, but the truth is that these basic functions of an agency are becoming harder and harder. As is always the case, a few companies are being proactive and thinking about training candidates and considering outsourcing non-core functions. Even if a UK recession is avoided it seems likely that problems with the US and Japan economies must result in a slowing of growth. Paradoxically, recruitment firms serving those sectors that do continue to expand will have increasing difficulties finding enough skilled candidates to fill those vacancies.î