January’s JobsOutlook survey, which tracks future hiring intentions rather than actual placements, confirms that many employers are now waiting for an upturn in economic prospects before they commit to growing their workforce. This month’s report shows that:

Employers are showing increasing caution although many still plan to hire: A marked dip in the short-term prospects for permanent staff was reflected in a two point drop over the month with 63 per cent expecting to increase their workforce and another 31 per cent planning to retain their present headcount. With regards to the longer term outlook, 59 per cent expect to take on more permanent staff over the next twelve months and another 39 per cent intending to maintain staffing at existing levels, an eight point decrease on the previous month. Despite the dip in business confidence, it is interesting to note that a significant number of businesses plan to increase or maintain staffing levels in the short and medium term.

Skills shortages in 2012:  Employers identified a number of key sectors where skills shortages were likely to be encountered over the coming year. On the permanent side, shortages were expected in professional and managerial roles; nursing, medical and healthcare;  and Education and Training. For temporary staff, skills shortages were likely to occur in Driving and Distribution (21 per cent), Catering and Accommodation (21 per cent) and Accounting/Financial (16 per cent).

Demand for temporary staffing remains firm:  Despite the first 12 week qualifying period for agency workers to receive equal treatment having been reached in December, expectations over short term demand for agency staff have remained stable.

Twenty seven per cent of employers plan to increase their use of agency workers during this period, with another 57 per cent saying theirs would remain at the same level – a total of 84 per cent.  The long term forecast is for most employers – 65 per cent – to keep their usage at existing levels while 22 per cent said they planned an increase.

Commenting on the latest statistics, Roger Tweedy, the REC’s Director of Research said:

“Last November’s figures showed that many employers were hoping to slightly increase their permanent workforces early in the New Year. However, there has been a significant dip in employer optimism that is likely to be linked to continuing economic concerns over the sovereign debt crisis in the Eurozone.

“Most employers have retrenched to a much more cautious ‘wait and see’ approach, which is starting to be reflected in the REC’s Employer Confidence Barometer index which fell back one point from the month before. However it is important to note that this confidence index is still five points above its lowest mark last September and that a significant number of businesses still plan to take on new staff during the course of year, despite the slight change in mood.

“The outlook for temporary staff remains encouraging despite the Agency Worker Regulations (AWR) now being in force. Since October, 65 per cent of employers have not made any changes to their use of agency workers following AWR implementation. This suggests that the impact of the Regulations is mainly being felt in certain specific sectors. The data also shows that the vast majority of businesses plan to maintain or increase their use of temporary staff which indicates that flexible working options will continue to provide an important outlet for employers and job-seekers.”

JobsOutlook is based on a monthly survey of employers with results based on a sample of 600 on a three month rolling basis. To subscribe to JobsOutlook, visit the website, http://www.rec.uk.com/about-recruitment/research/research-bundle

The latest rankings of the fastest growing recruitment firms in the UK once again highlight the recruitment industry’s ability to reinvigorate and flourish in the toughest of conditions.

The tale told by Recruiter’s 2012 Fast 50 rankings is one of resilience under harsh economic pressures. This year’s league table also showcases the recruitment sector’s unrivalled ability to continually regenerate itself through spawning dynamic new participants. And the rankings also reveal that fast growth is possible in recruitment sectors outside the high-value, high-margin, high-tech and white-collar playing fields.

Recruiter’s Fast 50, compiled by Boxington Corporate Finance, lists the fastest growing private recruitment businesses in the UK. And Tim Evans, Boxington’s managing director, contends that the 2012 edition offers a distinctly different, and unique, picture of the sector than of years past. “This year’s Fast 50 is the first that captures the full impact of the economic recession that began in 2008,” Evans tells Recruiter. “And probably because of that, it’s the most interesting Fast 50 so far.”

“As we’d expect,” he continues, “the growth rates in this year’s Fast 50 are lower than they have been. So the average growth rate this year is 26% versus 37% last year. That reflects the economic conditions that this year’s Fast 50, in looking back three years, captures.”

Another trend that emerged was the appearance of a different mix of sector specialists than in years past. For instance, Evans says, “we see a much lower number of financial specialists. In fact this year there are only two — in previous years, there was an average of six”.

Industrial recruiters on rise

Also, Evans adds: “We see an emergence of blue-collar industrial players who previously have not featured highly. Players in the industrial driving and warehousing space who are consolidating the UK market, in doing so, are achieving good growth rates.”

Pointing to other interesting features this year, Evans says: “There’s a good showing for much larger international engineering businesses such as Fircroft [Engineering Services] and Swift [Worldwide Resources]. Because they’re so big, their getting onto the Fast 50 is all the more impressive. In percentage terms, the bigger they get, the harder it is to compete on growth rate. But they’ve done so, and that’s to be commended — it’s impressive.

“And there’s also a good showing for brand-new entrants — the likes of A24 Group (20), Arrows Group (5), Ship Shape Resources (8) and Transline Resource Group (4).”

Evans goes on to say. “We think this is testament to the recruitment sector’s ability to generate new players and grow new players.”

Weathering the storm

Looking ahead to 2013, Evans says: “This Fast 50 captures businesses that have grown in recession, and another recession is coming in. It will be difficult, but all of them look well positioned in their growth to weather the storm well. All of the Fast 50 have shown they’ve got the substance and momentum to endure hard conditions.”

Click here to view Recruiter’s Fast 50 2012

Headline messages from this month’s AWR Monitor are as follows:

• There was a slight decrease in temp billings according to January’s REC/KPMG Report on Jobs. However, this is most likely linked to the economy than to any impact of the AWR.
• Future hiring intentions tracked through the JobsOutlook survey is encouraging. Over the next 12 months 87 per cent of employers are looking to grow or maintain temporary staff levels, with only 13 per cent planning a decrease in usage.
• Full equal treatment measures kicked in over the Christmas period. This did not result in any significant flurry of queries and requests for information from workers.
• Recruiters have flagged concerns over the fact that some clients remain reluctant to share relevant information The REC is continuing to take forward the message that the AWR is an issue for both agencies and clients.
• Queries to the REC Legal Helpline have focused on holiday pay, calculating basic pay as an hourly rate and putting agency workers back on a contract for services from Regulation 10 contracts. Other common queries are around the status of limited company contractors, calculating the 12 weeks qualifying period and defining a ‘substantially different role’.
• Actively promoting the ongoing benefits of flexible staffing to employers is a priority. As part of this, the first meeting of the REC’s Flexible Work Commission will take place next week.

Reviewing the latest data and feedback from members, Tom Hadley, the REC’s Director of Policy and Professional Services says:

“It is now over 100 days since the AWR came into force. Despite the slight dip in the number of placements highlighted in last month’s Report on Jobs, overall demand remains strong. Temporary and contract staff will continue to provide employers with a key means of bringing in the right skills at the right time.

“The feedback from recruiters is mixed and varies from sector to sector. There is no doubt that the regulations have created significant cost and resourcing implications for the industry but the priority has been to reassure client organisations over the ongoing viability and benefits of using agency staff. Providing ongoing support to members and continuing to monitor the impact will be key priorities for the REC in 2012.”

REC members can access that latest AWR Monitor at the following link:http://www.rec.uk.com/regions-sectors/sectors/awr/awrmonitor

Examples of some of the anecdotal feedback from REC members includes:

“We have now dealt with a number of temps under AWR and whilst time consuming because each company has different terms and conditions it is getting more straightforward with each one we do.”

“We did our best to educate the clients before it came in and most clients have generally been co-operative.”

“OK so far, there is more paperwork to deal with, but we have put systems in place to ease the burden on Account Managers.”

“One client is not happy about paying a very well paid temp for the extra holiday they will be entitled to under AWR, he considers the temp to be overpaid for what they do.”

“Some employers are still under the impression that the regulations are nothing to do with them and this is just up to the agency to sort things out.”

“One challenge has been the fact that employers have very different working patterns. Ensuring that the way AWR is implemented reflects these differences has been a big task.”

“The AWR has shaken the ‘issues tree’ for clients and has lead to many clients reviewing a number of broad areas linked to the supply of temporary and contract staff.”

Key pointsof the Report are:

• Modest decline in permanent staff appointments
• Temp billings decrease for first time since July 2009
• Permanent salaries broadly flat; temp pay down slightly
• Growth of candidate availability accelerates

Agencies’ billings from the employment of temporary/contract staff declined in December. Although marginal, it was the first reduction in almost two-and-a-half years.

Despite a marginal drop in temporary billings, the first since July 2009, the Report on Jobs showed that demand growth for contractors and temps slowed in December, but was still in positive territory. Demand for engineering and construction contractors was in second place, after nursing and medical care, and IT & computing was in fifth place, with both bucking the overall trend.

Permanent staff salaries remained broadly stable in December, rising only fractionally on the month. Temporary/contract staff hourly pay rates fell slightly for the first time since January.

Growth of candidate availability accelerated markedly in December. The latest increase in permanent staff availability was the sharpest in two years, while temp availability improved at the fastest rate since October 2009.

Kevin Green, the REC’s Chief Executive, says:

“The report highlights a third month of contraction in permanent placements and a reduction in the use of temps for the first time in more than two years. While the jobs market is tough it remains resilient and is functioning well. There are clearly signs of decline but we are nowhere near the lows seen in 2009 when the market deteriorated at a drastically faster rate than we are seeing today.

“Employers are still hiring and using temps in large numbers; however, they are starting the year on a cautious note and are taking their time to make workforce decisions. The quicker the Eurozone sovereign debt crisis is resolved and we get some economic visibility, the better it will be for employer confidence and the UK jobs market.

“The sector analysis shows that some sectors remain strong, namely engineering, technology, IT, office professionals and we’ve also seen a surprising increase in demand for nursing, medical and care despite ongoing austerity measures. However, the finance and accountancy market has been in negative territory for two consecutive months and the hotel and catering sector has seen a significant downturn over the past two months.

“This might be a short-term blip as we build up to a peak of demand around the Olympics itself but it could also be a worrying indicator of a lack of engagement in the Olympics from both business and consumers.

“Overall, the cautiousness in hiring seems to be driven by a lack of confidence in the wider economic situation than a significant downturn in demand. For example, in the last month’s survey of employers (JobsOutlook), a total of 71 per cent of them said they still intend to increase their permanent workforces in the coming year and this month’s Report on Job shows that vacancies remain strong.”

Bernard Brown, Partner and Head of Business Services at KPMG comments:

“It is a huge concern to see temporary placements falling in tandem with permanent employment opportunities, making it difficult to be optimistic about the employment market in 2012.  The decline in temporary roles, seen for the first time in almost two-and-a-half years, is a clear indication that businesses are too nervous to even make short-term commitments, given the continued uncertainty across the Euro Zone and so much talk of a tough year ahead.

“With fewer jobs available, employers could be forgiven for thinking they have the pick of the market, but sadly the reality is far different.  The latest data suggests that, in the key industries of engineering, construction and IT, attempts to fill the gaps that do exist remain unsuccessful. It seems that employers are refusing to offer jobs just to ensure vacancies are filled, meaning that long-term unemployment trends look set to continue.

The Report on Jobs provides the most comprehensive guide to the UK labour market drawing from original survey data provided by recruitment consultancies. Copies of the report are available on annual subscription from Markit. For subscription details, please contact: economics@markit.com.

The first 12 weeks qualifying period was reached on December 24th. There has been significant interest in how this milestone might impact on recruiters and their clients.

Commenting on developments over the Christmas period, Lewina Farrell, REC Solicitor and Head of Professional Services says:

“As predicted, the world did not suddenly come to an end on December 24th.  We will monitor the situation closely over the next few weeks and continue to ensure that recruiters are properly briefed in terms of handling any queries or claims from workers.

“Relatively few calls came into to the emergency legal help-line over the Christmas period which is a good sign. However, the feedback from members confirms that some clients remain reluctant to share relevant information for equal treatment purposes with their recruitment partners. An immediate priority is to continue reinforcing the message that the AWR is an issue for both agencies and clients.

“Clients who do not provide the relevant information to their agencies will be held liable by the employment tribunal for any breaches of the AWR which result from their unwillingness to co-operate. Therefore it is everyone’s interests to develop effective communication channels and imperative that clients pass the appropriate information to their recruitment partners in a timely fashion”.

The latest AWR-Monitor is available to REC members at the following link: http://www.rec.uk.com/regions-sectors/sectors/awr/awrmonitor

Saturday sees the end of the first 12 weeks qualifying period since the Agency Work Regulations (AWR) went live.

Commenting on this AWR milestone, Tom Hadley, the REC’s Director of Policy & Professional Services says:

“Nothing cataclysmic is going to happen on December 24th. However the date is a significant landmark and will act as a further prompt for recruiters to ensure that they are as prepared as possible to handle any queries or claims from workers.

“One priority is to have good internal mechanisms in place so that any misunderstandings about entitlements under the new regulations can be nipped in the bud. Although we are unlikely to see a huge surge of activity, we are concerned that some employers have so far been unwilling to share information with their recruitment partners. Ultimately, the best way of avoiding any tribunals will be to be to ensure that there are clear and transparent communication channels between agencies, candidates and employers.

“Looking ahead, our analysis is that the overall number of tribunals generated through the AWR will be limited. This is a view shared by other organsisations such as ACAS. On a general note, the overall demand for agency staff has remained strong despite the new regulations coming into force and we will continue to monitor the impact as we move past the December 24th milestone.”

The short term outlook for the agency work market has improved by three points with a total of 81 per cent of employers planning to either grow or keep their agency workforces at existing levels. Within this, a significant proportion of employers – 31 per cent – are planning to actually increase their temporary staff. This compares to 22 per cent at the same time last year. In the longer term, a total of 83 per cent of employers are looking to grow or keep their temporary staff levels the same in the next 12 months.

The latest Jobs-Outlook shows that 52 per cent of employers made changes – including staff training – ahead of the Agency Workers Regulations coming into force on October 1. Another 39 per cent said they did not make any changes while nine per cent said they were not sure. The number of employers planning to make less use of temporary staff due to the AWR was seven per cent down on the previous month, perhaps reflecting increasing recognition that in most sectors the impact of the regulations on clients will be minimal.

Commenting on the latest figures, REC Chief Executive Kevin Green says:

“The ongoing economic uncertainty has clearly influenced hiring patterns. Using temporary and contract staff is an attractive option and continues to provide a means of bringing in the right skills at very short notice.

“There is no doubt that the AWR has created significant cost and bureaucracy for agencies. At the same time, the need for agency staff is well established. The main impact to date has been the development of new supply models rather than any sort of collapse in demand for temp and contract labour. These are trends that we will continue to track as we approach the first 12 week milestone.”

JobsOutlook is based on a monthly survey of employers with results based on a sample of 600 on a three month rolling basis. To subscribe to JobsOutlook, go to:http://www.rec.uk.com/about-recruitment/research/research-bundle

At the same time, agencies’  billings from the employment of temporary/contract staff rose for a twenty-eighth consecutive month in November. However, the rate of growth was only slight and weaker than in October.

Pay pressures remained subdued in November, with both permanent salaries and temporary/contract staff hourly rates increasing only marginally. In the case of the latter, the rate of inflation was at a 10-month low.

The availability of staff to fill job vacancies continued to rise in November, but at a slower pace. Growth of permanent candidate availability was only marginal and the weakest since May, while the rate of increase in temp availability was at a three-month low.

Kevin Green, the REC’s Chief Executiv says:

“This month’s Report on Jobs from the REC and KPMG highlights a rapidly declining jobs market. The market has been slowing since May but this slowdown has accelerated in the autumn. This is being driven by the double whammy of falling business and consumer confidence.

“This is bad news for those out of work and, as a consequence, we expect unemployment to rise in December and January. On a positive note, however, the report shows that temporary staff appointments are still growing, albeit at a decreasing rate.

“The Government has done as much as it can in the short term to remove restrictions to employment and stimulate demand. However, if confidence doesn’t return quickly to get the jobs market moving again, the Government may need to take more radical action in the New Year.”

Bernard Brown, Partner and Head of Business Services at KPMG comments:

“This month’s Report on Jobs makes grim reading.  Given the uncertainties of the European market, the Government’s recent stimulus package could not have come sooner, as unemployment creeps ever higher. Whilst most commentators suggest unemployment will peak lower than 3 million, this figure may be tested in the year ahead.

“Time will tell if recent interventions are enough to reverse the worrying trend of the last few months. If so, we should pick this up in our statistics over the next few months.

“Bright spots in an otherwise gloomy data set were that the agencies surveyed reported rising demand in permanent placements for engineering and construction staff ahead of this time last year, and demand also rose for IT and computing staff, together with the executive / professional and secretarial / clerical categories.  But these isolated sectors do not compensate for an overall decline in permanent placements.

“According to the survey panel, economic uncertainty is resulting in a number of employers placing jobs on hold and taking longer to make recruitment decisions.  Last week’s autumn statement contained a number of welcome measures aimed at helping businesses to grow and to ease red tape around employment but they are unlikely to make much difference in the short term.”

The Report on Jobs provides the most comprehensive guide to the UK labour market drawing from original survey data provided by recruitment consultancies. Copies of the report are available on annual subscription from Markit. For subscription details, please contact:economics@markit.com.

The monthly report found:

Temps still in strong demand:  Despite the Agency Workers Regulations coming into force in October demand for agency staff remains strong. Twenty eight per cent of employers said they would be increasing their temporary workforce over the next three months with another 52 per cent keeping it the same – an overall rise of five points on last month. For their longer term use, 83 per cent of employers interviewed were looking to increase or keep their temporary staff levels at their current levels.

Employers confident about growing workforce in the long-term: In the next 12 months, 59 per cent of employers are planning to grow their permanent staff while another 35 per cent say they intend to keep it at the same level as today, a dramatic leap of 20 points on last month. This in turn has boosted the overall confidence ‘Barometer’ rating which is up three points suggesting that despite continuing economic uncertainty, employers are now taking a more robust view of their workforce plans for 2012.

Employers remain cautious about short-term permanent hiring: Of the employers questioned, 35 per cent intend to keep their current headcount the same, confirming employer caution for the final months of the year.  One in ten have plans to decrease their workforce.  Fifty four per cent of employers plan to grow their permanent workforce in the next three months restoring the five point drop recorded last month.

Slight shift in possible impact of public sector cuts: 82 per cent of public sector employers are expecting some degree of impact as a result of the cuts. This is a sign that they are more aware of what the cuts entail, and of how they will impact. At the same time, 23 per cent of private sector employers expect public sector cuts to have a serious impact on their own business. On a more positive note, 15 per cent of public sector employers expect the cuts to have no further impact on staffing levels in their organisations – compared to six per cent last month.

Commenting on the latest data, Roger Tweedy, the REC’s Director of Research said:

“Despite latest forecasts pointing to slower economic growth, there are at least a few positive signs for the jobs market. Permanent employment opportunities will remain constrained in the short term but longer term hiring intentions provide glimmers of hope.

“Employers are also recognising the benefits that temporary staff can add in supporting seasonal demand and workforce flexibility during these uncertain times. Hiring intentions for temps are up on this time last year despite the Agency Worker Regulations coming into force in October.

“Although the full impact of these Regulations will not be apparent until the first tranche of workers end their 12 week qualifying period, the early signs are that temporary and contract work will continue to provide a key outlet for employers and workers.”

JobsOutlook is based on a monthly survey of employers with results based on a sample of 600 on a three month rolling basis. To subscribe to JobsOutlook, visit the website, http://www.rec.uk.com/about-recruitment/research/research-bundle

The CBI made its demand following the results of a survey which revealed a negative impact on prospects for temporary workers. ARC’s own survey supports the CBI’s findings bringing together the reports of its members into the impact the AWR has already had on the industry. ARC’s findings indicated that the AWR is not only having an adverse affect on businesses, but is actually undermining the job market for agency workers.