Confidence returns to UK recruitment industry 2003/2004

Following difficult market conditions over the past few years, the UK recruitment industry experienced strong growth in the 2003/2004 period, with a reported 7% increase in turnover to 24.5 billion, according to research by the Recruitment and Employment Confederation (REC) in association with PricewaterhouseCoopers. Growth in turnover was largely driven by accelerating demand for temporary employees, up 5.7% on the previous year to just over 1.5 million, and, in part, an increase in volumes of permanent recruitment, up 9.1% to more than 560,000.

The REC/PricewaterhouseCoopers Annual Recruitment Industry Survey 2003/2004, which examines performance and trends in the UK recruitment industry, also found that margins in the temporary sector were up from 17.9% in the previous year to 18.5% in 2003/2004, the first year not to show a decline since 1999/2000.

Gareth Osborne, Managing Director, the Recruitment and Employment Confederation said:

The 2003/2004 survey confirms that the UK recruitment industry is extremely strong and successful, showing increased turnover and increased volume in both permanent and temporary placements. These positive figures reflect the improved economic conditions since the last survey and are further evidence of the key contribution that the recruitment industry makes to the UK economy and labour market.

Jonathan Hook, partner responsible for the recruitment sector at PricewaterhouseCoopers, said:

The outlook for the industry looks brighter still. Given current growth forecasts for the UK economy, survey participants have predicted growth for 2004/2005 of 8% to 26.4 billion, with 84% believing that temporary placement margins will be maintained or increased. There is a real sense of optimism shining through with the potential for another strong year of recovery in the offing.

Looking to the future, the report also highlights the key opportunities and threats as seen by recruitment companies. Forty per cent of those surveyed believe that the greatest opportunity for revenue growth is through preferred supplier agreements, with three-fifths indicating that such agreements still only account for less than 20% of their business. A potential shortage of skills, followed by proposed legislative changes, particularly in relation to temporary workersí employment rights, and increased competition, are perceived to be the main threats faced by recruitment businesses. In addition, the Annual Recruitment Industry Survey 2003/2004 found that the number of permanent placements per consultant per annum rose from 18.1 in 2002/2003 to 19.7 in 2003/2004. In the temporary sector, average sales per consultant rose from 593,028 to 640,346. These results suggest that recruitment firms are managing their costs and growing revenues largely from their existing teams.