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:
“The latest ONS figures paint a positive picture of the current state of the UK jobs market with employment levels rising by 286,000 in the three months to July, the largest rise since records began in 1971.
“It’s encouraging to see that unemployment fell by 8,000 to 2.47m in May to July, taking the level down from 7.9 per cent to 7.8 per cent and signalling that the recruitment sector is starting to stabilise. This stabilisation is largely due to the rise in part-time positions over the past quarter, which more and more UK workers have taken to avoid facing the prospect of further unemployment.
“However, whilst the fact that unemployment is down is good news, there are several major challenges that face the recruitment industry in the coming months which could have an effect on these figures. Although job creation in the private sector has helped to counterbalance the sharp decline in public sector jobs, this is not expected to continue and with 600,000 further job losses* planned in the public sector over the next two years, the recruitment industry could experience a significant drop in output. Furthermore, until the outcome of October’s Comprehensive Spending Review, in which further cuts to public sector spending will be revealed, the sector faces further challenges ahead.
“With this in mind, it is now more important than ever for the Government to reinforce its efforts to help the private sector create more jobs to offset the unavoidable cutbacks in the public sector and alleviate the increasing pressure on recruitment agencies to place more candidates in fewer positions.
“Whatever the outcome of the next few months, recruitment agencies will do well to remember that a healthy cash flow and survival are intrinsically linked, particularly in these unpredictable times. It is therefore vital that recruiters are confident in their financial management and are in a strong position to overcome any challenges throughout the remainder of the year and into 2011.
“Alternative cash flow funding solutions, such as invoice finance, can enable recruitment firms to do just this by providing them with an immediate and ongoing injection of cash into the business against the value of outstanding customer invoices. Retaining a strong client base to maintain stability and drive revenue in their business is also key for recruiters, as is the ability to seize new opportunities that come their way. With this in mind, 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 save recruiters valuable management time, allowing them to focus on their business.”
* According to the Labour Market Outlook quarterly report from the Chartered Institute of Personnel and Development (CIPD) and accountant KPMG
