In response to the employment figures released from the Office of National Statistics (ONS) this week, Edward Winterton, Bibby Financial Services’ recruitment finance specialist, says:
“We expected the jobs recovery to become sluggish as public sector cuts begin to take effect but it is appears there is still reason to be optimistic with the release of the latest ONS figures showing a continuing improvement in the UK jobs market.
“The Labour Market Report by the Chartered Institute of Personnel and Development (CIPD) and accounting firm KPMG reported this week that a surge in private sector job creation will counterbalance any public sector job cuts throughout the rest of 2010, with more firms looking to hire staff than make redundancies. But the question we are all asking is how long will the private sector be able to offset job losses in the public sector? The next six to 12 months will be the key period, as government spending cuts begin to bite, and real sustained pressure is put upon the UK jobs market.
“A report last month by accountants PwC predicted the Government’s austerity drive could lead to nearly one million jobs being lost. On top of the 490,000 job losses expected in the public sector, PwC believe a further half a million jobs could go in the private sector as firms are affected by the loss of government contracts. As a result, the CIPD has estimated that an extra 1.6 million private sector jobs will be needed by 2015-2016 to stabilise the jobs market.
“This places serious pressure and demand on the private sector and the ability of these to drive economic and job recovery in a very challenging market place. Moving in to 2011, recruitment agencies will undoubtedly play an integral role in helping businesses in the private sector. Recruiters must employ strong financial management and ensure they have a healthy cash flow in place that enables them to secure their business and seize opportunities for growth as the market landscape changes.
“Alternative cash flow funding solutions, such as invoice finance, can enable recruitment firms to do this by providing them with an immediate and ongoing injection of cash into the business against the value of outstanding customer invoices as soon as they are issued. Outsourcing back office functions, such as payroll and credit control, as well as ensuring a regular and smooth flow of cash into the agency, can also save recruiters valuable management time, allowing them to concentrate on driving their business through these difficult times ahead.”
