Comment: Recruiters pin hopes on stabilisation

8th Oct 2009 13:57

It would be a bit premature to say that recruitment firms are turning a corner following the ravages of the credit crunch, but three companies in the sector this week reported some encouraging - albeit tentative - trends.Michael Page and Hays both talked about stabilisation following tough times, while in a much less comprehensive update Robert Walters said that the decline 'appears to be levelling out in some areas.'Page and Hays recruit for a wide range of jobs, though salaries in positions advertised by Michael Page start at about £16,000 a year (around £8 an hour), while you can find jobs on Hays' website paying as little as £6 an hour. Robert Walters places workers in permanent and temporary jobs in accountancy, finance, banking, law, IT, sales, marketing and other sectors from 39 offices in 17 countries. In its update yesterday, Hays said: 'We are seeing early signs of stability in the United Kingdom and broader signs of stability in Asia Pacific, although at present no indications of recovery in either market.'Things are still deteriorating in continental Europe, which was hit by the downturn later than other regions, Hays said.It also emerged that Hays' chief executive and finance director have been awarded 20% salary rises to £1.8m and £1.3m respectively, although investors could be forgiven for failing to take heart from this.In the UK and Ireland, which accounts for about half of Hays' net fees, one particular problem for the firm is that, while things are stabilising in the private sector, they are becoming tougher in the public sector business. Public sector fees represented about a third of Hays' UK and Ireland revenues. With parties from both main political parties set to wield the axe on public spending following the next general election, this problem won't go away any time soon.Michael Page, which has a greater focus on white collar workers, saw similar declines over the quarter but seemed to be rosier on the outlook.'As the third quarter progressed, market conditions in an increasing number of the countries in which we operate began to show signs of stabilisation and, with our lower cost base, we have recorded an operating profit in the quarter,' the firm said.While public sector problems are a worry for Hays in the UK, Michael Page chose to emphasise private sector recovery there.'The stabilisation that started to become evident in the banking sector is now spreading to other sectors,' Michael Page said.The UK accounts for about a third of Michael Page's revenue.Michael Page's comments on continental Europe (part of its Europe Middle East and Asia division which accounts for 44% of turnover) largely echoed those of Hays.'We had anticipated that the seasonally quieter third quarter would be challenging, particularly in Continental Europe, which was generally later into the downturn,' it said.But while Hays sees market conditions continuing to decline in Germany, where it is focused on IT contracting, Germany is one of the markets where Page has seen most stabilisation.Like Hays, Robert Walters said it has seen signs of improvement in Asia and like Page it has seen such trends in the banking sector. As can be gathered from the highly tentative and uneven nature of signs of improvement at recruitment companies, tough times lie ahead, especially as unemployment is still rising. Some geographical and business areas are improving while others are deteriorating. It will be interesting to see how each firm adapts and which emerge as winners are losers in this unpredictable environment.