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So what are the pressures on the recruitment companies to keep up with the changes?

“The fortunes of our industry are inextricably linked to the overall health of the UK economy GDP,” reported Marcia Roberts, the Recruitment and Employment Confederation’s friendly new CEO. “Most other economic indicators remained relatively strong for the period of the survey and this year’s annual turnover report reflects this picture.”

In November 2006, the annual industry report from the REC showed that temporary and contract recruitment continued to grow at a significant rate rising by 6.4% to £21.6bn in the period ending March 2006.

Marcia is the first CEO of REC who has experience of being both a recruiter and a purchaser of recruitment services. Until recently she served as deputy chief executive of REC and is well placed to observe changes in the industry.

She continued: “It is sometimes easy to forget how fast and how far the recruitment industry has come in a short space of time. Less than 10 years ago, we were reporting a total turnover of just £10.5bn. The scale of our industry and its contribution to the economic and social well-being of the UK is now becoming increasingly understood. These results are cause for celebration,” she continued, “but I would ask everyone in the recruitment industry to use this success as an opportunity to ‘raise the bar’ to a new level. Only then I believe can we reach our full commercial and professional potential.”

Sarah Brane, in Swindon, also has first-hand experience of the industry and told me: “I’ve worked in recruitment for eight years and now run my own recruitment consultancy. Recruitment is a lot of hard work. Effectively you are trading a commodity which has the ability to change its mind! Above all, it’s a sales role and all about targets and revenue. It’s a good, usually young, atmosphere and quite ‘buzzy’ which I enjoy. If you have the energy and a real desire to make money, then recruitment will be a good move for you. It’s one of the only jobs where you have control over how much you make. Get it right and you can earn a small fortune.”

Recruiters are becoming increasingly indispensable in the search for suitable talent as the UK is seeing significant skills shortages in certain sectors. Gordon Cullen, director of Ernst & Young, which sponsors the recent Recruitment and Employment Confederation’s Annual Industry Turnover and Key Volumes Survey 2005/06, said: “There are now serious shortages in construction and engineering as the country is embarking on a number of major construction projects. The government is looking to improve the infrastructure surrounding our railways and the Olympic project in Stratford is becoming Europe’s largest construction project. Consequently, construction companies are becoming increasingly reliant on recruitment agencies to find staff to fill vacancies. There are similar shortages in the City as large accountancy firms fight over both newly qualified and senior accountants and there are similar shortages in IT and banking.”

Supplying workers to an NHS in chaos also no doubt contributes to the profits of recruitment agencies as thousands of nurses trained at the expense of the British taxpayer are leaving Britain to work abroad because there are, for the moment, no jobs for them. Dr Peter Carter, general secretary of the Royal College of Nursing, said that Britain was facing a “massive skills shortage” as a result of the government’s “yo-yo work-force planning” and predicted that British hospitals would soon have to recruit nurses from abroad to make up staff numbers. “Funding for the health service has more than doubled since Labour came to power,” he said, “but so much of the funding has been misdirected and wasted through poor policies and a lack of good management.”

Amanda Lydon, from Cambridge has direct experience of the system.
“Having worked as a nursing auxiliary/care assistant for an agency, I know that thousands of pounds is spent on agency staff. This money could be put to better use employing more staff, or raising the wages of medical staff to encourage people to apply for more jobs. I have been paid more for a night’s work, than the trained staff on duty. This was very nice for me at the time, but seems wrong when you look at the state of the NHS.”

Mark Serwotka general secretary of the Public and Commercial Services Union (PCS) commented further on government policy: “It is completely unacceptable that departments are rushing headlong to meet abstract numerical targets on efficiencies and job cuts without a clue of how the quality of service delivery is affected…you have departments such as HM Revenue and Customs looking to save £105m through staff cuts, but spending £106m on consultants all in the name of efficiency.”

The recruitment sector, which could be viewed as almost an outsourcing process, has itself adopted the practice of bringing in outside expertise out of necessity. Software packages and website hosting, factoring and back office providers are all prevalent in the industry.

To achieve those objectives many such companies are turning to the big outsource providers to deliver a cost effective solution to run their back office operations.

CEO of Hydra, Laurent Drouin, for instance, is confident that the substantial investment made by his company in its own technology, people and infrastructure, will be enough to increase the profitability and productivity of his customers, which include many of the top 250 recruitment companies in the country, whilst at the same time improving service levels to temps, clients, consultants and management. Hydra is the leading payroll and accounting provider to the recruitment industry in the UK and Laurent is keen to explain why. “Our industry expertise and insight, our ability to help drive business processes, and our access to leading-edge technologies, produce results that set the course for a high-performance business. We’ve made an enormous amount of changes in the last 18 months including opening an offshore operation in Mauritius which is a country that has a good pool of talented and well skilled workers. In the last two years we’ve replaced our infrastructure and software completely from scratch. Currently we mainly deal with recruitment companies but I think that what we’re doing for the recruitment sector can replicate itself across different sectors into more medium-sized organisations as well so if you take the cleaning sector or leisure sector, they all need people and they all need paying so we can provide that service. Recruitment companies have changed in how they find candidates, they use the web quite a lot now whereas 10 years ago their use of the web wasn’t as much but companies still need recruitment companies despite having the web – the industry is still very buoyant. Companies without an offshore operation have a limited shelf-life, really. There’s no doubt people want more for less.”

Other employers across the country are also upbeat.

Mark Cahill, managing director of Manpower UK, the UK’s leading employment experts, said: “Employers across all regions of the UK and almost all industry sectors are optimistic about their hiring plans for the start of the year which is great news for a healthy start to 2007.” The recent Manpower Employment Outlook Survey, based on interviews with nearly 50,000 public and private employers worldwide, shows a big increase in demand from the public sector and NHS employers in particular. Employees with sales experience in the financial services industry are also in demand.

The survey analysed results at a regional level and indicated that employers in the north east and Scotland are the most confident, while employers in Northern Ireland, the south east and the south west all report figures above the national average. Employers in the east Midlands, Wales, West Midlands and Yorkshire and Humberside are the least confident of those surveyed and confidence amongst London employers has declined sharply by 18 percentage points from the end of 2006.”

Gordon Cullen, director of Ernst & Young again: “The recruitment industry is increasingly looking at innovative ways to fill the skills shortages and the recent influx of skilled workers from eastern Europe is providing a significant boost to the UK economy. Without this flow of workers it is likely that the economy would be expanding considerably more slowly as UK companies would be unable to take advantage of opportunities to sell goods and services as they would have no staff to carry out the work.”

The UK’s farming and food system has long been highly dependent on foreign workers brought in by a system of temporary labour providers or “gangmasters” who meet the demands of growers, pack-houses and food processing facilities, not always quite legally. The disastrous deaths of 23 migrant cockle pickers in Morecambe Bay nearly three years ago highlighted an issue that has concerned the industry and government for over a decade. Factors such as complex sub-contracting, forgery and foreign workers speaking little English, make detection of the worst offenders difficult, but fortunately the whole area is now better regulated and this will go some way to countering abuse. The Gangmasters (Licensing) Act laid the foundations for a licensing and registration scheme which came into force in April 2006. In such a previously unregulated area, gangmasters who met basic health and safety and other conditions were naturally losing out to those with a total disregard for their workers.

Bernard Matthews Foods Ltd, which advertises itself as “Promoting diversity in rural places”, has seen a radical increase in labour from overseas, those from Portugal for instance, by at least tenfold. A week after the diagnosis of the H5N1 virus at a farm in Holton, Suffolk this year, volunteers from the Portuguese community, that forms the bulk of the plant’s 1,300-strong workforce, were given triple pay, anti-flu jabs and protective clothing when they lost no time in agreeing to cull the birds. Would British workers have been so keen?

On a more positive note, however, new employer-led National Skills Academies are doing their bit to top up skills levels in the UK. By its very nature construction tends to be a hugely fragmented industry and focused, on-site, employer-led training has to be the way forward.

“The prevalence of temporary work is caused by employers, whereby they are not prepared to make a commitment to their staff,” suggests Steve Durrell, a builder from Cheshire. “I think this is also having an effect on the level of staff training that is being given to staff in a number of industries. In construction and trades, it is more costly to commit to your staff and give training and apprenticeship schemes when an already fully trained Polish builder can be hired on a temporary contract with low wages and no security, so the exploitation is simply deflected to him.”

Designed to drive up the standard of industry training and to improve productivity and tackle skills shortages across the UK, however, the new, site-based training is to be offered by new National Skills Academies for Construction. This new approach to construction training leaves behind the traditional “bricks and mortar” model of an educational establishment and sees the start of an innovative “employer-led” approach to construction training. By 2010 more than 30 National Skills Academy for Construction projects, supported by a fleet of mobile training centres, will be established on-site at major construction projects throughout the UK.

Mike Bialyj, field director, ConstructionSkills said: “The National Skills Academy for Construction is giving industry the training and support that it needs, where it needs it. The new mobile network will enable training on-site to cover the entire supply chain for each project. We see it as a ‘win-win’ situation, not only is it an opportunity to ‘skill-up’ local people for the construction industry it is also a way of developing sustainable communities.”

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Bonnie Yuill,
e-mail: bonnieyuill@googlemail.com

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