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The survey showed that despite overall growth in the recruitment industry, the last year was a tough one for the sector.
The report showed that economic conditions have had a significant impact on the jobs market over the past year, 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 over £24 billion were created by the recruitment industry in 2001/2 with over 1.3 million temporary or contract workers on the payroll in any given week.
| Total recruitment industry sales grow by 5.9 per cent
Permanent recruitment fees contract by 8 per cent
Temporary recruitment industry growth of 7.1 per cent
Margins down in temporary market by 0.7 per cent
Decrease in staff employed in the industry of 7.7 per cent | | Mixed fortunes for recruitment industry in the past year |
Recruitment agencies placed 519,761 people in the same period into permanent positions, an increase of 2.6 per cent on the previous year. However, it is evident by the fall in turnover that the value of each permanent placement has dropped, according to REC.
The survey also suggested the industry anticipates low growth in the year ahead.
Respondents to the survey predicted an increase in industry turnover of 4.5 per cent, although turnover in the permanent industry is expected to grow by 6.1 per cent.
Growth in the temporary/contract marketplace is expected to be lower than in 2001/2 at 4.4 per cent.
Tim Nicholson, Chief Executive of REC, said: "The survey demonstrates that the recruitment industry continues to be 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."
Barry Roback, MD of the JSA Group, which specialises in contractor services, said: "From our own statistics: contracts are shorter; contracts are lower in value (6.67 per cent down year on year) and; there are less of them (our estimate is that the contract market has declined by 40 per cent since 1999).
"The good news is there are still contracts around (JSA maintains close to 70 per cent of the level of new contractors joining JSA compared to 1999/2000). Things have not got any worse compared to Q1 this year; therefore we are at the bottom of the cycle, awaiting the upturn.
"The other noticeable change is to the characteristics of the contract industry.
"Although we are seeing more 'IR35-friendly' contract opportunities compared to two years ago, most contractor start-ups are made using a Managed Service rather than Personal Service Company (PSC), approx 85 per cent 'Managed' v. 'PSC' as compared to 10 per cent pre-IR35, and many older PSC clients now caught by IR35 are converting to Managed Services, although at a slower rate than we would have expected. If consistently caught by IR35, some contractors still prefer to operate out of a PSC despite the lack of financial reward for doing so."
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Richard Powell, © Shout99.com 2002
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