Confidence up in recruitment sector

Following difficult market conditions over the past few years, the UK recruitment industry experienced strong growth in the 2003/2004 period, with a reported seven per cent 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 per cent on the previous year to just over 1.5 million, and, in part, an increase in volumes of permanent recruitment, up 9.1 per cent 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 per cent in the previous year to 18.5 per cent in 2003/2004, the first year not to show a decline since 1999/2000.

Gareth Osborne, Managing Director of 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."

Preferred supplier agreements

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 60 per cent indicating that such agreements still only account for less than 20 per cent of their business.

A potential shortage of skills, followed by proposed legislative changes, particularly in relation to temporary workers’ employment rights, and increased competition, are perceived to be the main threats faced by recruitment businesses.