We entered 2011 full of trepidation as to UK recruitment we could see no reason to have higher levels of confidence given the state of the economy and the fact that the Coalitions cost cutting had been only rhetoric without impact on the economy other than concern.
We were completely wrong footed in January which saw out best sales growth for 30 months as the business exploded and 25% growth was achieved. Yes, 25% in a month – which was unbelievable and clearly unsustainable. We kept asking ourselves – was this an extraordinary blip or had we completely misread the market.
The growth was across the board in terms of industry, geography and a mix of new and established clients. The common thread appeared to be that many had delayed and delayed recruitment in 2010 and decided en masse that 2011 was another year and to loosen the shackles.
We ourselves decided to raise our investment in marketing for February as our forward order book looked good – a return to the good old days prior to recession, although this was kept low key as we were not convinced that market fundamentals had changed.
The reversal from January was almost immediate. The general pipeline fell away, for all run of the mill jobs, as employers started to feel the draft of economic reality and stopped recruitment in all areas, except filling genuine skills shortages in certain areas such as Engineering, Welders, Fabricators and CNC operators but certain other reliable areas like the Care Sector and Warehousing went into reverse.
We were hearing from UK clients how tough the markets were. Contract renewals under severe price pressure. Contracts being moved for pennies and relationships broken of many years standing. Order books associated with UK retail being way down hitting the distribution sector. Most worryingly, the competition quoting at below market rates. We can’t comment on other industries but this was certainly seen within recruitment with rates of temps and permanent placements being cut.
We chose to stay away from this as rate cutting is a slippery slope to nowhere and relied on our specialist knowledge in plugging skills shortages that still exist and building on our overseas relationships where better demand exists especially for those interested in working in Australia.
In summary this has been a very odd first quarter, unexpected stellar growth for a month to be followed by the hardest market conditions we have seen in the UK throughout the recession.
If your agencies are telling you any other story then be cautious there could be problems ahead. So many UK based agencies are hanging on by their fingernails and marketing rhetoric doesn’t pay the bills. High Street agencies will also be the hardest hit by the Agency Workers Directive that comes into force on 1 October 2011
We are just thankful that for recruitment the world is a very small place these days and that the international markets are looking good.
Author: Chris Slay
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