City comment

21 July 2010

Government data on temporary employees shows a substantial quarter-on-quarter jump of 78,000 or 5.3% in the three months ended May and now stands 9% above May 2009, a clear sign of the early cycle upturn in the private sector. The future may well hold some
considerable challenges as the public sector is structurally reformed and significantly downsized but at least the wider labour market is now alive and kicking.

Furthermore, as turmoil and change enter the public sector domain some have the view that this will lead to an increase in demand for temporary staff -from senior interim managers to office support -but while this is a real possibility there will also be many budget cuts which lead to reduced absence cover, cancelled fixed-term programmes and fewer jobs. As even the Office for Budget Responsibility predicts 600,000 less public sector jobs, there are few easy answers foretelling the final outcome.

The future may well hold some considerable challenges as the public sector is structurally reformed and significantly downsized but at least the wider labour market is now alive and kicking

Adding to the (mainly) more positive news from recruiters’ pre-close season reports at the end of June, Q2 reports have indeed been encouraging and headcount has now stabilised. In the UK, Robert Walters proved the most upbeat, helped by its heavier reliance upon financial services, generating a rise in net fees of 36%. Michael Page posted a 14.4% net fees rise with gains across all divisions but Hays offers a mixed story as net fees declined 6% versus last year driven down by a 14% Q-on-Q drop in its important public sector business. Against this Hays achieved a 10% gain on the quarter in private sector and is still switching resource back there. All three companies see opportunities to expand market share against weakened competition.

Meanwhile Morson, despite a mixed trading environment as public sector programmes are curtailed, is making good advantage of its strength, acquiring long-standing competitor, Wynnwith, plus Babcock’s in-house, Acetech, recently for a total cost of £10.1m.

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