19 November 2008

The UK market and what it means for Australia

This article originally appeared in Issue 59 of InSight Published 19 November 2008

Last week I told you a little about the personal aspects of my recent 2 week trip to the UK. Today I want to provide a few professional comments about the UK recruitment market. It is the one market that is very relevant for Australian recruiters as the two-way flow of both candidates and recruiters is, I suspect, greater than between any other country.

Here are some statistics released recently by the Recruitment Employment Confederation (UK equivalent of the RCSA in Australia & NZ) covering the twelve month period from April 2007 - March 2008 for the recruitment industry in the UK.

Category
2007/08
2006/07
change
Total annual sales
£27 billion
£26.7 billion
+1%
Value of perm placements
£4.276 billion
£3.514 billion
+21.7%
Total # of perm placements
726,863
787,280
-7.7%
Average perm fee
£5,882
£4,463
+31.8%
Average # of temps/contractors employed weekly
1.220 million
1.377 million
-1.8%
# staff employed in the recruitment sector
108,883
101,286
+7.5%

The UK recorded a 140,000 increase in the number of people unemployed in the three month period up to September. The rise in the number of people out of work has risen to 1.89 million - the highest in 11 years. Unemployment officially stands at 5.7% of the workforce (Australia is 4.3%).

The UK's largest publicly listed recruitment company, Hays Plc, reported an 8% drop in fees for their UK business in the June - September 2008 quarter and also reduced total head-count during the same quarter by 5%.

These results were mirrored by Michael Page International Plc, who reported an 8.3% reduction in income and a 4.1% decrease in head-count during the same period.

Accounting firm Deloitte reported that in the UK 25 recruitment firms filed for administration in the third quarter of 2008, up from 15 the previous quarter.

In demonstrating that the unemployment rate is not a reliable indicator of the availability of skills, the UK Government has just released a list of jobs available to migrant workers from outside of the EU.

This skills shortage list forms part of the UK government's new five tier point-based immigration system, which comes into effect next Thursday. Occupations on the skills shortage list include:

·         sheep shearers

·         engineers

·         scientists

·         hospital consultants

·         specialist nurses

·         vets

·         teachers

·         dentists

·         filleters of frozen fish (Scotland only)
The skills shortage list enables UK companies to circumvent the usual procedure for recruiting outside of the European Union (EU). This involves only being able to recruit from non-EU countries if suitable applicants are not able to be sourced from 2 weeks of advertising within the EU.
It was very revealing, talking to one of my UK clients who recruit in the legal sector.  

Legal recruitment in London has been hit very hard by the global financial meltdown as many of London's law firms have built their practices on the global nature of London's once-thriving financial sector. 

Permanent vacancies have dropped by about 75% in 12 months. Senior lawyers in the UK are now willing to look at opportunities in the Middle East, Australia, New Zealand and Asia much more favourably than 12 months previously, as a way of continuing to develop their career and earnings, while the London market undergoes a downturn which some have predicted could last as long as 3 years.
November's BOSS magazine, carried in last Friday's Australian Financial Review, reported the following:
"The Times newspaper in the UK reported the monthly exodus of Australians from the UK in the year to June 2008 was on average 2600 per month. This is almost 50% up on the average of 1750 a month that departed between 2000 and 2005. In August this year, finance recruitment company Michael Page recorded a 27% increase in the number of Australian expatriates looking to return home for work, compared to the same month, last year."

Leading recruitment-to-recruitment agency owners, Mary Dowrick of Dowrick and Rosemary Scott of Scott Recruitment Services, both report that they have seen a significant increase in enquiries from recruiters in the UK, both Aussies and Brits, interested in recruitment consulting opportunities in Australia.  

The feedback from recruiters on the ground in the UK is that many more sectors besides finance & banking are being hit by a slowdown in hiring activity. The collapse in the value of the Australian dollar, against other major currencies, makes returning to Australia with pounds sterling or US dollars in your bank account, much more financially attractive than it was just 4 months ago. 

Undoubtedly, the UK recruitment market has been more significantly impacted to date, by the global financial crisis than the Australian recruitment market. Whether Australia will ‘catch up' is hard to say at this early stage. The impacts, as I see them in 2009 for Australian recruiters, are the following:

  • more applications from UK candidates, both working holiday and permanent residents, seeking to action their long-held desire to work in Australia
  • less Australians travelling to the UK on 2 year Working Holiday visas
  • less Australians moving to the UK to take up Tier 2 (medium and highly skilled workers) skills shortage visas
  • more skilled Australians, who have been resident in the UK, returning to Australia permanently
  • for those Australians still looking to work overseas - an increased attractiveness of alternative regions such as the Middle East and Asia
Even with a tightening job market, any increase in skilled workers either coming to or remaining in Australia, provides great opportunities for recruiters to capture a greater proportion of skilled candidates in their database and then to provide an excellent service to them to encourage even greater referrals.

In ANY market conditions, there are always opportunities for smart and savvy recruiters to take advantage of.

What opportunity does the current state of the UK recruitment market create for you?

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