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.

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.

Comment by bill josephson on July 7, 2009 at 8:39am: IMO the aftermath of this recession will be Asia/India's rise as the global economic powers including jobs and economic growth engines due to the fact they have intelligent labor costing 20-25% of an American worker in India and 10% of an American worker in China with the technology to access them increasing corporate profits. Their people produce the goods and services we in the US no longer provide--even if our multinational companies employ them.

The only way we can compete with them for jobs is to drastically reduce our cost of doing business, government mandates/regulations, and lower taxes......none of which I expect to see as it means disassembling of our social safety net which the majority of citizens in Europe and America demand.

My concern is there will always be demand for recruiters here in the US just not as many as back in 2000, or even 2007.

I sure hope I'm wrong.

Bill

Comment by Todd Kmiec on July 7, 2009 at 10:18am: Regarding Perm in North America, I think your "false dawns" comment hits the nail on the head. We have seen little upticks in activity and then back down again. While we would all like to talk this thing up, reality is that we don't have any real sign that we have bottomed yet. Bill, regarding the need for recruiters in North America, there is no way that will go away for good. Business in North America is suffering but it is so vast and so complex that hiring will always have a place for recruiting. At this point, the need is less because the market is smaller (fewer jobs and fewer jobs that warrant paying outside fees to fill). However, as the market shrinks, so does the number of recruiters in the business and eventually the market will come back some. When that happens it will be a bigger market for those of us who are left.

Todd Kmiec

Comment by bill josephson on July 7, 2009 at 12:10pm: Many tried by mid 2002. I know I was one of them, and scorned as most just saw a pendulum swinging whereas I was seeing a critical mass paradigm shift to cheap global labor cutting their teeth on our business engaged in Y2K work in the late 90's only to have the commercial use of the Internet, fiber optic technology, World Trade Organization, and Most favored Nation status all used to effectively access this cheap labor overseas when they returned home.

It explained why corporate hiring was tepid in the 2000's and why we had a "jobless recovery," in my opinion. Where I disagree with you, Karen, is that it will decades to fix this. I believe the policies we took dug us into a huge employment hole. I believe the current policies we're taking in response is making the hole insurmountable to extricate ourselves from.

There'll be a need for recruiters. Just not as many in the future as we had, IMO.

Again, I hope I'm wrong and things come roaring back in time. I just don't think they will.

Bill

Comment by Todd Kmiec on July 7, 2009 at 1:23pm: I think you are both right. Bill is referring to current policies taking us down that same road that Karen is referring to with California and saying there may never be a recovery given the path they are taking. That's possible. I'm still hoping it won't be forever and that changes in political leaders and policies will start us down the road to recovery. However, even with that it would appear that it will take a long long time. Probably decades. I think the hard part is that many are looking for a recovery next year. I think the depth and length of this thing will be incredible and unexpected for most people. But, nothing goes in a straight line forever, so whether we never have a full recovery or it takes a long time there will be little mini recoveries here and there. Our industry is being re-shaped in this and that will continue. You're absolutely correct that recruiters will have to be better and that there will always be a need for them.

Comment by bill josephson on July 7, 2009 at 1:24pm: As I mentioned, what is happening in California, is going to create a Huge ripple effect, that is yet still to be seen.. again, History repeating itself..

I do have a question.. Why is it we never learn from history? that it always have to repeat itself?

IMO, California portends our future. IOU's there due to budget shortfall are IOU's elsewhere due to budget shortfall. Why is there budget shortfall? Not enough people in this country vote or want pro business growth/jobs creation incentive legislation. Instead, they want government providing for them sucking money out of the private sector into the public. We're in a position where we need to decide jobs/private sector viability or social safety net programs due to cheap global competition, IMO

Bill

Comment by bill josephson on July 22, 2009 at 9:01am: I agree with Jenn and Karen. There will be the need for recruiters. However, with increased numbers of jobs finding their way to cheap intelligent foreign labor destinations shrinking the US corporate sector employment market I believe there'll be a need for less of us. The key will be providing services for companies they can't provide themselves. The most crtiical service, IMO, will be providing "passive invisible" candidates they can't access on their own.

These are candidates gainfully employed, not on job boards, and not in social networks. In my "survival" recruiting mode it's the only way I can see differentiating myself from my clients. Finding a quality situation with a combination of company and candidate with a business sense of urgency to take action in this business climate is practically impossible.

Bill

Comment by bill josephson on July 22, 2009 at 10:46am: IMO, Corporate America is in a long term mode of paring down US operations migrating to cheap intelligent labor intensive countries with huge populations and growing middle classes supplanting ours as their future revenue streams. Their middle classes grow, ours shrinks.

I also see an employment paradigm shift where companies will start following the lead of Haliburton moving their corporation overseas to get away from our onerous high taxation, government mandates, and regulations as the "American Dream" of working hard, living right, and aspiring to be wealthy in under heavy assault by those not ascribing......and there seem to be more of the non ascribers than ascribers today.

After each recession I've worked through there was a major business change upon recovery. In 1983 there was a major shift from manual systems to automated with the high tech boom. In 1993 there was a shift from the IBM Mainframe to Personal Computers. In 2002 there was a major shift from US workers towards Offshore Outsourcing and Insourcing cheap H-1B's for increased profit. IMO, when this Depression ends I see a major corporate migration from the US to Asia/India as we become them, and they become us. I loathe Thomas Friedman "The world is flat" but I have to give him his due.......technology and policy have flattened the world as we fall, and other countries rise.

China and India combined have over 3 Billion people in a cheap cost of doing business immature environment. The US has 300 Million people in an expensive cost of doing business mature environment. What do others think likely happens?

Just my five cents......

Bill

Comment by bill josephson on July 22, 2009 at 11:45am: I agree that women joining the workforce is what vastly enhanced disposable family income. It also contributed to inflation as the more disposable income a family had the more dollars chasing goods and services driving their prices up .

I agree there's an enormous disparity between CEO and worker bee income--but I don't see this as the reason jobs aren't being created here or why worker income isn't keeping up. I see technology such as the Internet and Fiber Optics instituted in the late 1990's and policies enabling companies to access cheap labor globally undermining our worker's salaries. My bet is income was doing fine till 2001--then fell off a cliff making a 30 year graph look worse than it really is. Just like the Free Traders love to mention the overall benefit--but most of that was wracked up between 1993-2000. From 2001 we've been in the corporate tank, IMO.

Until we lower taxes, lower government regulations, lower government mandates, eradicate the WTO, revise Most Favored Nation tax policies, abolish H-1B visas till our own are absorbed into the workplace, and get illegals out of the country bankrupting us while lowering wages I don't see where we start creating private sector jobs here again. Problem is the above would alienate both Democrats and Rockefeller Republican Free Traders so will never be instituted. Free Traders don't want to hear the flaw in their philosophy.......business' demand for unrestrained access to cheap labor for profit destroying the US Middle Class.

Just my five cents......

Bill
Boston