Executive Summary
Key Note estimates that at the end of 1997, the core employment agency industry comprised around 8,200 businesses, which together operated 11,800 offices or branches. Their combined turnover for 1997 was £11.9bn, up from £10.2bn in 1996, although some industry estimates are higher. 94% of turnover was derived from invoiced sales for placing temporary and contract workers. The remainder came from fees charged for placing permanent workers.
The employment agency business has boomed since 1993 and reached unprecedented heights in 1997. Most firms enjoyed a bonanza in sales and profits. However, at mid-1998, there are indications that the global boom is over. Growth in some recruitment sectors has been reduced to a trickle and in others, it has reversed into a decline.
Nevertheless, even if the economy returns to recession by the end of 1998, employers will continue to experience a shortage of good, qualified personnel at all levels. This will ensure the industry against a sudden decline in business.
While the industry continues to be regulated with lenience, external threats from political and legal sources are growing. The costs of making a mistake in the recruitment process, even unwittingly, can be fatal. Agency managements are having to devote increasingly more time to ensuring that they remain on the right side of legislation.
The industry remains highly fragmented, although consolidation proceeds apace. In particular, major US agencies are showing growing interest in making acquisitions in the UK.
However, the UK market also remains oversupplied by a large and still growing number of employment agency branches. A downturn will mean office closures and competition on price.
Key Note estimates that, between 1998 and 2000, total turnover of UK employment agencies will increase by 6.9% to reach £14bn.
Thirteenth Edition 1998
Edited by Jenny Baxter
ISBN 1-85765-842-6
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