Are we there yet? Has the decline in hiring finally reached the bottom?

Perhaps the most common question I get asked these days is whether the dramatic decline in the staffing market has leveled off. My own staff, clients, candidates, even journalists want to know whether there really are any ‘green shoots’ in terms of employers venturing back into the labour market.

As anyone in recruitment knows, the answer to that question is a moving target, hard to pin down at best, totally elusive at worst.

And of course it depends what sector we are talking about, what level of employee, and what country or even city. What I can say is that in the Aquent space – Marketing and Design recruitment – it’s been a series of frustrating ‘false dawns’. We see a flurry of hiring activity for a week or two, suggesting we are on the cusp of bigger and better things. Then just as quickly, it dies out, leaving us with slow order-flow and patchy pipelines.

But the question keeps getting asked, so I am going to try and answer it as best I can. To make my assessment, I have looked at our business results in the countries we operate, but I have also gone right to the coalface to get opinion from people who are immersed in hiring and placing Design, Marketing and Communications professionals. I asked our senior management across the world the simple question …

“Has the staffing and recruitment market ‘bottomed’ yet”

In other words, has client demand, as measured by job orders, job offers, placements, Gross Profit generated, temps out working etc, continued to decline over the last month. Or has it plateaued in recent months? Or, is it actually on the incline – in other words improving.

The chart below reflects our observations for both temp and perm recruitment.

So this is what we reckon is happening. Remember, no science here. Just well informed opinion and a little but of “gut feel”.

Europe has not even really reached the bottom we believe. The economies there are in dire straights, and confidence has not returned to employers in any meaningful way. Lay-offs continue, and in England we feel the perm market is getting slightly worse if anything, while temp has bottomed and stabilised, albeit at far lower levels than this time last year. France, Netherlands and Germany are seriously depressed. Both temp and perm continue to decline, and my personal view is that we will bottom some time in the second half of 2009, looking for recovery in 2010.

Australia is still doing it very tough. The government tells us Australia is not in recession, but if you are in the staffing business, it feels very much like one. Both temp and perm have declined significantly for that last 9 months, and probably much longer. Recently, we sensed the bottom has been reached and we surmise we will bounce along at this pace for several more months, before any up-tick can be expected. The only bright spot from this part of the world is a small improvement in temp demand in New Zealand, but that may well be at the expense of perm hiring.

Asia is a mixed bag. Singapore has reached the bottom we think, but no serious signs of growth are in sight. Malaysia did not dip as much as its neighbours, and has recovered a little quicker. Our office there is recording similar numbers to last year, which can’t be said for many of the others! In Japan the temp market has stabilised in our view, but perm hiring is slowing and given the state of the Japanese economy, I expect that to continue to deteriorate.

India and China were the boom-time darlings prior to the meltdown, and they have been seriously affected in terms of employer hiring activity. However, both are bouncing back, particularly China. Apart from the strong results I see from our Shanghai and Beijing offices, I know this from personal experience having visited five clients in China myself only a few weeks ago. All were major companies, all were CEO level people I met, and all were currently hiring or planning to soon. I enjoyed my trip to China as you can imagine!

North America is the biggest revenue-earner in the Aquent network. We have 30 plus offices there, and dominate our space. Perm continues to decline in the US and Canada where the recession is vicious and where laying-off staff is inexpensive and accepted more readily by employers than, say, in Europe or Japan. My colleagues in the States do report however, that temp and contract in Design and Marketing is on the up, with digital and interactive specialists in particular demand.

So there we have a view from the trenches so to speak.

Are we there yet? No, I don’t quite think so. But if this recession were a marathon, I would think we are over the half way mark and the finish line is perhaps just edging into view.

Greg Savage

21st June 2009