Despite difficult market conditions, the UK recruitment industry grew by 4.3% in the financial year ending April 2012 to reach £25.7bn, according to the Recruitment & Employment Confederation’s (REC’s) Recruitment Industry Trends Survey 2011/12.

The growth was driven by a 5.5% increase in turnover from temporary/contract business, from £22.1bn in 2010/11 to £23.3bn. However, turnover from permanent business fell by 6.6% to £2.4bn.

Commenting on the figures, which covered a period of economic uncertainty and included the first six months of the Agency Workers Regulations, Roger Tweedy, the REC’s director of research, says they reflected “quite a strong performance in a challenging market”.

The figures show the industry has recovered strongly from its low point of £19.7bn in 2009/10. And according to REC chief executive Kevin Green, they show the resilience and adaptability of the industry, leaving it “not far from being at its all time peak of £27bn in 2007/08”.   

Green adds that the figures show that AWR did not have the negative effect some predicted: “If AWR had had the cataclysmic impact some people said, we certainly wouldn’t have had that growth.”

Other key figures:

• The recruitment industry workforce grew by 1.8% to 92,446

• Permanent volumes fell by 9%. In contrast temporary volumes were 5.4% higher.

• Continuing pressure on margins 

• On the permanent side, the proportion of agencies earning margins of 25%+ halved to 1.7%

• Among temporary recruiters, the proportion of agencies earning over 20% fell from 40% to 36%

Green says that the one figure that surprised him was the 11% decline (according to the Office of National Statistics) in the number of recruitment businesses operating in 2011.

He comments that in many cases this was due to company owners deciding to sell up, as a result of factors such as AWR, margin pressure and a weak economy, and tempting offers from larger competitors.