First-quarter trading updates from the big hitters of the recruitment world have left little doubt that the revival in the UK job market is well entrenched. Hays (HAS) reported 14 per cent growth in UK net fee income - the strongest rate of quarterly net fee growth for six years. Hays said the growth was broad-based with all regions up and both public and private sectors seeing strong activity levels. Most encouragingly, the permanent segment - a key bellwether of job market confidence given the extra commitment required to take on permanent staff rather than fill a gap with a temp - saw growth of 25 per cent.
"This shows we are into a real recovery in the UK jobs market," says Hays finance director Paul Venables. He says that confidence has returned, both to companies making hiring decisions and increasingly now to candidates who up until recently were more concerned with keeping the job they had than looking for a new one. Mr Venables says that even accountants, described as "the most conservative population of our candidates," are now looking to move jobs. That confidence on both sides of the job market equation is leading to churn, which is exactly what recruiters need to make money.
Another thing that should help recruiters is growth in salaries, as that means a larger chunk of commission. With confidence returning to the jobs market, employers are going to have to offer better salaries to attract and retain talent. Something that appears finally to be filtering through to wage growth with the most recent Office of National Statistics figures showing wage inflation finally outpacing inflation following years of wage declines in real terms. The figures also showed the number of people out of work in the UK is at a five-year low. "The current conditions in the UK - high demand from corporates, a shortage of candidates and signs of wage inflation - are almost perfect for staffing companies," say analysts at Barclays.
Michael Page (MPI) chief executive Steve Ingham echoes the positive sentiment. He says the recruitment market is following its classic recovery pattern - the temp market recovering first, followed by an uptick in lower-salaried permanent jobs and finally, the still to come, full-blown rebound in permanent jobs at the top end of the pay scale. Page is more skewed to this higher-salary end of the job market with around three-quarters of its business in the £40,000-plus salary bracket. A fact that helps explain why Page's UK growth is lagging Hays somewhat at 8 per cent in the first quarter. When this part of the market does come back, Mr Ingham says Page should start to land those bigger fees; "when we grow, we grow fast".
The UK jobs market is still important for the recruiters, but they are now global beasts having exported their model to untapped staffing markets overseas. Hays generates around two-thirds of its net fees outside of the UK and Ireland, while for Page the figure is even higher at 74 per cent. The best of the growth at present is in Asia, where Hays reported a 25 per cent jump in first-quarter net fee income driven by recruitment hotspots China, Japan and Malaysia.
Continental Europe is another important region as staffing markets there remain relatively immature compared to the UK with much of the hiring still done by companies themselves. There are signs that these markets are following the UK's lead and heading into firmer territory with Page reporting a return to growth in France and Germany in the first quarter, and Hays reporting net fee growth of over 10 per cent in Germany, Belgium, Spain and Switzerland.
The one weak link at the moment is Australia where the fallout from the end of the resource-led mining boom has made life tough for recruiters. But even here things appear to be improving. "We're confident we've bottomed (in Australia)," says Mr Venables. A comment that is backed up by small-cap recruiter Robert Walters (RWA), who recently said it was seeing "early signs of a return of market confidence".
