If you are UK based, you would have been welcomed into 2008 with a warning from Gordon Brown in the Financial Times that Britain’s economy faced a dangerous year ahead, due to rising energy prices and ripples from the sub prime mortgage crises in the US. Clearly, this subject is not exclusive to the UK - the threat of global economic turmoil was one of the hottest topics on the agenda at the World Economic Forum.
This has understandably led to fears of recession, but what is the reality?
The technical definition of a recession is when the economy shrinks in two successive quarters. Yet, the UK economy grew by 3.1% in 2007, its fastest rate in three years! A report by Deloitte expects the UK economy to grow by 2% this year and by a slightly smaller margin in 2009. In the same FT report Gordon Brown gave reassurance on his belief that the British Economy would dip only slightly this year before recovering in 2009.
Clearly we are far from being in a recession, but as recruitment professionals at the mid to senior income bracket, which we at Antal International refer to as Rising Star™ recruitment, we would be foolish not to consider the impact a potential economic downturn may have on the recruitment industry.
In 2007 the recruitment industry saw a very strong period of growth, with over 680,000 job vacancies created in the UK in the final quarter, many of which are still open. This is the highest figure since comparable records began. Whilst there was a slow down in new jobs created this January, compared with 2007, the demand for talented professionals remains. According to the Adecco Job Creation Index, over 42,000 jobs were created across the UK’s 21 key industries in January 2008, whilst Adecco operate at lower levels in the market, this is still a good indication of continued labour market buoyancy. There is a countrywide average unemployment rate of just over 5% meaning employers face the same challenges in attracting talented professionals.
Whilst there has been a slight dip in front office-banking recruitment, the inevitable redundancies and constricted bonus payments, there has equally been an increase of recruitment needs across all other industry sectors.
So is it hype?
It is a well-known fact that the media sells more news based on negativity, which may compound fears around the possibility of a recession. As a result businesses can start to feel insecure and belts may be tightened. Personnel Today, in it’s January edition stated that whilst the economy is under increasing scrutiny we are yet to experience a lull. In fact, salaries are higher than ever and the demand for skilled workers remains strong. When the media starts to predict rises in inflation, HR departments often react by putting a freeze on recruitment – or they may even start to make job cuts. But this is a simple knee-jerk reaction and often not the wisest course of action for the future success of the business. In fact the article goes on to say that rises and falls in the economy and their knock-on impact on HR and recruitment are part of a cycle we have seen before and that we will see again.
Graeme Read, Group Managing Director at Antal International states, “We have not seen a slow down in hiring at all! A downturn may affect some major banks, but we usually find that if they slow hiring in one area, they are still hiring key talent in others. Instead of panicking, companies realise that to alleviate future recruitment needs they must snap up rare skills to ensure their business stays competitive through a market down turn. It is essential they remain well resourced, whatever happens in the marketplace. For businesses to remain strong under the threat of recession it is imperative they recruit highly skilled individuals or ‘Rising Stars™’ who can ensure their survival and future.”
This is why recruiters in general remain positive, a recent survey by Broadbean Technology (Europe's leading distributor of online job advertisements) found that 93.7% of recruiters are confident that 2008 will be a good year for business.
In addressing the worldwide Antal International office network at a recent global conference Doug Bugie, CEO of Antal International Network used a well-known American expression relating to the recruitment industry:
“We were invited into a recession, but rejected the invitation. This may only sound like a rallying cry and it has been used in the past to great effect when urging recruiters forward in a recession, but the fact is there is no recession, as defined technically as two consecutive quarters of negative performance. Don’t allow the media and the sensational news to fool you, there is an underlying demand for talent now and because of sheer demographics (there simply are not enough talented people in all the major economic regions of the world) this will remain strong for many years. I’m not being an optimist or a cheerleader to try to artificially rally you forward. Our business is difficult and challenging, but it is also loaded with opportunities to benefit your clients in a major way, change the lives of the candidates with whom we work and it can be done properly and measurably adding to your own and your family’s good fortune.”
“Ours is a great industry! So onward and upward! You told us that you would double your business this year and we believe you. We will do all we can to help you achieve this and it is achievable!”
Being in international recruitment for more than 15 years and building over 50 successful offices across more than 25 Countries, Tony Goodwin, Group Chairman and Founder of Antal International speaks more specifically about the Antal International recruitment and franchising model:
“To be recession resistant, recruitment companies must have the ability to adapt quickly to market needs and seek out and leverage supply and demand gaps, our business model is robust for 5 clear reasons.”
Five Reasons that make Antal International a Recession Resistant Business Model:
1. Strong discipline focus on the market, which can be adapted to industry supply and demand trends.
2. Specialists in placing Rising Stars™, or high impact mid to senior level individuals.
3. Antal International has been in business for 15 years and has cultivated a strong team of international Business Leaders with nearly 100 years of aggregate experience, who have survived many cycles of global economic instability.
4. 52 offices across 27 Countries, sharing at least 25% of business across industry sectors, disciplines and cross border.
5. Exceptional training, continuous professional development and support for all our franchisees.