Recruitment Agencies (Temporary & Contract)

This report examines the UK temporary and contract recruitment market, including organisations that recruit on behalf of clients for temporary positions, whether they call themselves recruitment consultancies, recruitment companies or employment agencies.

This report comes at one of the bleakest times in the history of this industry. In November 2008, the online jobsite Monster.co.uk reported that there had been a record drop in staff demand during the month, and that the outlook for the first 3 months of 2009 was poor.

According to the Recruitment and Employment Confederation (REC), the UK temporary and contract recruitment market was worth £22.73bn in the year ending March 2008 - a fall of 1.9% compared with the previous year. 2008 was a difficult year for the recruitment industry, as employment fell in many sectors and many employers froze their recruitment. The worst-affected sectors were financial services, construction and retail. In January 2009, figures confirmed a second quarter of negative economic growth, meaning that the UK is officially in recession, and this will continue to affect most job types, from blue collar to low skilled. It is, therefore, likely that 2009 will see a high number of redundancies and low demand for recruitment.

However, although the recruitment industry is challenging, around 90% of the market still exists and is likely to survive the recession. The largest sectors of the market are: nursing/medical, industrial/blue collar, construction and education. The nursing/medical sector remains the strongest, with some of the highest shortages in the recruitment industry.

The leading companies (by number of temporary and contract workers) in the recruitment industry include: Adecco UK, Allied Healthcare Group, Pinnacle Staffing Group, Manpower, Impellam Group, Pertemps, James Reed & Partners, The Best Connection Group, Randstad and Kelly Services (UK).

There was a large amount of corporate activity in 2008. For example, two Netherlands-based companies, Randstad and Vedior, merged, bringing together all their subsidiaries to create the second-largest human resources (HR) services company worldwide. In addition, Corporate Services Group and Carlisle Group merged to form Impellam Group PLC, and Pertemps is now largely owned by an Australian company, with some of the shareholding held by the company's employees. There were also many smaller acquisitions.

Owing to the economic downturn, the short-term outlook for the temporary and contract recruitment market is undoubtedly bleak. Key Note is forecasting a decline of 3% in the market value in 2009, but growth of around 1.5% is then forecast for 2010. Redundancies in the recruitment industry are inevitable, and a spate of acquisitions is also expected.