Recruitment Matters - February 2017

Issue 46 February 2017

RECRUITMENT MATTERS The View and The Intelligence

Member of the Month

Legal update and the IRP

Challenges ahead p2-3

Andy Cox of Rethink Group

Legal issues for Recruitment 2017

p4

INDUSTRY STRONG, BUT BREXIT CONCERNS REMAIN The value of the recruitment industry to the UK economy is £35.1bn per year, according to the ninth annual report on the recruitment industry’s performance from the Recruitment & Employment Confederation (REC).

The 2015-16 Recruitment Industry Trends report found more than three quarters of value added to the economy from recruitment derived from temporary employment activities.

It also found the top concern for temporary recruiters was the impact of last year’s Brexit referendum result.

REC chief executive Kevin Green says the report shows

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the UK industry is strong.

“The recruitment industry is bigger than ever before and contributes more to the UK economy than advertising, arts and recreation, and the food and beverage industry.

Our industry is the engine that drives the UK jobs market, enabling people to find the right job and businesses to find the talent they need to succeed,” he says.

“With near-full employment in the UK and candidate availability tightening, recruiters will play an even more important role in 2017.

We predict that the industry

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will grow by between 2.9% and 6.9% next year.”

The report also found that the majority of temporary and contract assignments last longer than 12 weeks. The average length of assignment is more than 12 weeks for 73% of contract workers and 61% for temporary agency workers.

This suggests that most temporary workers benefit

from equal treatment with permanent employees under the Agency Workers Directive.

“As the professional body for recruitment we’re determined to make businesses more successful by helping them secure the people they need.

And at the REC we remain absolutely passionate and totally committed to helping to build a labour market that works for recruiters, employers, and the people they hire,” says Green.

Key statistics from the REC’s

IRP Awards Winners p8 Recruitment Industry Trends 2015/16 include: • More than three quarters (76.1%) of value added to the UK economy by the recruitment industry was derived from temporary employment activities.

• There are 9,565 recruitment agencies with an annual turnover of more than £250k operating in the UK. • The top three sectors in which recruiters made permanent placements in 2015/16 are professional/ managerial, technical/ engineering, and secretarial/ clerical.

• The top three sectors in which recruiters made temporary placements in 2015/16 are industrial/blue collar, accounting/financial, and secretarial/clerical.

• The top concern of recruiters operating in permanent recruitment is a lack of relevant skills and experience amongst candidates.

• The top concern of recruiters operating in temporary recruitment is the consequence of the vote for ‘Brexit’.

For more information, visit www.rec.uk.com/trends

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Leading the Industry

THE VIEW

Safeguarding free trade will be vital, says Tom Hadley, REC director of policy and professional services

This is the year we celebrate recruitment’s true value, says Kevin Green REC chief executive We recently held the biggest and best IRP Awards, where we celebrate all that’s great about our industry. But the recruitment industry faces uncertain times over the next 12 months: • The economy is slowing and employers are getting nervous about investing and hiring • We have a government, which doesn’t recognise the true value of a flexible labour market • We will leave the EU at some point in the future.

But in the seven months on from the referendum, we don’t know the shape of the trade deal or what this means for immigration, creating further uncertainty.

We could be beaten down by events or we could go the other way and talk up our industry and the difference we make. We know that we do more than help Britain’s businesses get the talent and people they need. What we do every day transforms people’s lives.

• Recruiters help young people get their first job and that all important first step on the career ladder • Recruiters help those who

BREXIT 2017

are unemployed get back into work. We provide advice and guidance as we know it’s harder to get a job if you’re currently not working • Recruiters help nurses and doctors who want to work flexibly but continue to support the NHS save patient’s lives • We also help hundreds of thousands of people every year land their dream job.

In every hour, on every day throughout 2017, recruiters will transform lives. This is something we need to be proud of and we need to shout about.

We need to spend less time talking about the odd rogue or cowboy – it’s the REC’s job to deal with them. What we need is for every recruitment business large and small to talk up our industry and explain why what we do is important, it matters and it makes a difference.

Let’s make 2017 the year in which we highlight the industry’s true value to the economy, businesses and individuals lives.

Follow me on Twitter @kevingreenrec

“WHAT WE NEED IS FOR EVERY RECRUITMENT BUSINESS LARGE AND SMALL TO TALK UP OUR INDUSTRY” 2 RECRUITMENT MATTERS FEBRUARY 2017

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The recent suggestion that the UK might pay for access to tariff-free trade has underlined the fact that a variety of post-EU options remain on the table. With the government poised to trigger Article 50, what do the latest Brexit vibes mean for jobs and for our industry?

Emerging themes include the need for effective transitional arrangements to avoid a ‘cliff edge’ scenario of sudden change at the end of the negotiation period, and the positioning of the government’s industrial strategy as a blueprint for what the post-Brexit world might look like.

Business secretary Greg Clark has announced plans to “capitalise on our strengths in artificial intelligence and robotics” and to create a competitive environment for research, innovation and disruptive tech companies with a commitment of £4.7bn by 2020-21 in R&D funding. The industrial strategy will only work if underpinned by an effective skills strategy and we will continue to monitor the opportunities this may create for specialist recruiters.

Safe-guarding tariff-tree trade remains a priority for most of the organisations and employers we have spoken to, because the potential additional costs are significant. On the regulatory front, the ‘Great Repeal Bill’ raises a number questions – for example, the repatriation of powers going to the devolved nations. The debate around regulations is not just about our old friend AWR: specific issues raised in different sectors include patent laws in creative industries and labelling/packaging requirements in the food and retail sectors. The underlying message here is that employers need continuity and clarity.

From the outset, the REC has called for guarantees to EU citizens already working here and for an immigration system that allows employers to access the staff they need to prosper.

We will continue to make the point that this applies to nongraduate as well as highly-skilled roles and it has been encouraging to hear ministers and the CBI recognise this need.

Our discussions with four government ministers at the tail-end of 2016 were a sign of progress being made to position our industry at the forefront of key post-EU debates. We need government to work in partnership with recruiters. Once Article 50 is triggered, we will get into the details that will inevitably have significant implications for the jobs market.

You can follow Tom on Twitterr @hadleyscomment ment

www.rec.uk.com

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2.3%

THE INTELLIGENCE WITH REC SENIOR RESEARCHER, NINA MGUNI-JONES When will wages go up?

Strong inflationary headwinds are heading our way. The last bulletin for 2016 from the Office for National Statistics showed that consumer price index (CPI), which measures inflation, had reached 1.2% in November 2016. The increase in CPI reflected rising oil prices and currency depreciation, which had started to filter through to the high street. But inflation is still below the Bank of England’s target rate of 2%.

How we feel about inflation is highly dependent on wage growth. In November 2016, the Office for Budget Responsibility (OBR) predicted that in 2017 CPI will grow to 2.3%, whilst average earnings will grow by 2.4%, making real

PERM REBATES RETURN TO MAKE THEIR MARK & DEBTOR DAYS RISE The latest information from the RIB Index, sponsored

by Bluestones Group, shows that permanent fee rebates have become more prevalent, since Q2 2016, and have started to make their impact on recruiter earnings.

Additionally, debtor days have been on the rise over the same period.

Only within the significant minority of RIB Index contributors had permanent fee rebates been a feature of their business over recent years: across 2015, the upper quartile registered that they had rebated an average of

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wage growth close to zero.

This squeeze on consumer spending and business profits is likely to lead to stalling economic growth.

However, the last ONS labour market bulletin for 2016, published in December 2016 (for August to October), showed that the labour market remained steadfast. The employment rate remained high, at 74.4%, and the unemployment rate was 4.8%.

Current pay data is mixed.

The ONS labour force survey showed that on average, real average weekly earnings (total pay), which takes account of CPI inflation, grew by 1.8% in 2016 (up to October 2016). In comparison, the real average weekly (total) pay was 2.4% in 2015 and -0.4% in 2014.

In the REC’s monthly survey ‘Report on Jobs’, 19% of recruiters suggested that

OFFICE FOR BUDGET RESPONSIBILITY (OBR) PREDICTED THAT IN 2017 AVERAGE EARNINGS WILL GROW BY 2.4%, MAKING REAL WAGE GROWTH CLOSE TO ZERO

THE ONS LABOUR FORCE SURVEY SHOWED THAT ON AVERAGE, REAL AVERAGE WEEKLY EARNINGS WHICH TAKES ACCOUNT OF CPI INFLATION, GREW BY

average salaries awarded to permanent staff were higher in November 2016 compared to the previous month. And the ONS labour market bulletin published in December 2016 showed that whilst overall average weekly earnings grew by 2.6% (regular pay), some sectors experienced much faster rates of growth, with construction experiencing a 4.2% growth rate and wholesaling, retailing, hotels and restaurants experiencing a 3.9% growth rate.

In looking ahead, the CIPD forecasts that median pay will grow by 1.1% in the 12 months to September 2017. But some sectors are forecast to

IN 2016 IN COMPARISON, IN 2015 IT WAS

Figure 1. Median debtor days – quarterly average 48

■ Median debtor days – quarterly average

47

46.6

46 45 44

44.3

43 42 41

42.4 41.2

40

1.8% 2.4%

fare better than others, with manufacturing and production, as well as services likely to see a 2% increase in median pay, whilst the public sector are likely to lag behind with a 1% pay rise. And although one in five (19%) employers predict a pay freeze, another one in five (19%) predict a pay rise of 3% or more.

So whilst pay growth next year is likely to be muted, some sectors will likely weather the inflationary pressures better than others.

With the permanent fee rebates increasing in impact and average debtor days rising, it can be seen that employers (and supply chain partners) are clearly looking for additional efficiencies as well as behaving in a cautious manner towards hiring.

39 38 Q1 2015

Q2 2015

Q3 2015

3.2% of permanent billings, with the remaining three quartiles registering no impact. Since the start of Q2 2016, however, the median recruiter has been impacted, registering an average monthly rebate of 2% of permanent fees between April and October 2016.

Rebates amongst the upper quartile have increased to an average of 6.6% of

Q4 2015

Q1 2016

Q2 2016

Q3 2016

permanent billings over the same period.

Of additional note, RIB contributors have also recorded an increase in average monthly debtor days since the beginning of Q2 2016. At an average monthly median of 40.2 days across 2014, and 42.4 across 2015 and Q1 2016, this increased to 44.3 days in Q2 before rising to 46.6 in Q3.

Belinda Johnson runs employment research consultancy Worklab, and is associate knowledge & insight director of Recruitment Industry Benchmarking (RIB) – part of the Bluestones Group.

The RIB Index provides bespoke confidential reports on industry benchmarks and trends. See www.ribindex. com; info@ribindex.com: 020 8544 9807. The RIB is a strategic partner of the REC.

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MEMBER OF THE MONTH

ANDY COX

THE BEST THERE IS He generates £40k in revenue each month, starts his day at 4:20am, and is the best recruiter in the United Kingdom. Recruitment Matters meets Andy Cox of Rethink Group

Recruitment Matters: Congratulations on winning Recruiter of the Year at the IRP Awards. Has it sunk in?

building, both with candidates and clients alike.

AC: I think my approach

days to – it was unexpected.

When you attend awards, you hope to do well, but it’s very difficult to know how successful you will be because it’s extremely competitive and you’re up against the best in the industry. It was a huge privilege since the IRP Awards are very prestigious.

industry?

is holistic in nature, and I appreciate that a candidate can become your next client and vice-versa. I treat everyone I come across with the utmost care and attention, treating them the way I would like to be treated. I share my values – honesty, integrity and trust – with each candidate or client at the start of any relationship and look to build on it from there.

AC: A friend of mine from uni

RM: How big was 2016 for

was working for a successful recruitment company and that got me interested.

After graduating, I thought sales might be best suited to me because of my drive, determination and enthusiasm.

I like knowing the better you do, the more successful you can become. But the reason I’ve enjoyed so much success in recruitment is because of the people I work with. My approach is about relationship

you?

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RM: You were diagnosed with multiple sclerosis 13 years ago – has that amplified your drive?

RM: You see the big picture?

Andy Cox: It took a few

RM: How did you get into the

“I DELIVERED CLOSE TO £100,000 WORTH OF BUSINESS, WHICH IS UNHEARD OF IN THE INDUSTRY”

AC: Really big. In two months, I delivered close to £100,000 worth of business, which is unusual in the industry. I’ve always got an eye on my business pipeline, which is crucial in being a consistent performer. I’m always looking ahead to what’s coming next month and the month after that so I continually deliver a high level of performance.

AC: I would say it has. When I was younger I was a promising sportsman in rugby and football, and that was taken away from me. I had a lot of natural ability and was capable of being very successful, so I channelled that into work instead. It’s harnessed and galvanised that desire to want to do really well and be defined by my success, not by something that’s happened to me.

RM: I understand you have a daily routine?

AC: I start the day at 4:20am with a freezing shower as it’s the only thing that frees up my legs for a few hours. It usually means I’m at my desk between half six and seven, so I’ve done a couple of hours of work ahead of everyone else. It sounds daft, but does give me an advantage. I do work very hard and I often find myself working into the evening as well. All the people I work with have my mobile number, so

FACTBOX: Won: Recruiter of the Year, Permanent Recruiter of the Year at the 2016 IRP Awards Candidates placed in 2016: 41 Average monthly revenue: £42,000 Highest month: July - £102,000 Percentage of returning business in 2016: 70% people call me on weekends and late at night, because that’s my life and my business.

RM: And it’s working out for you?

AC: This year, I managed to buy an eight-bedroomed house in Wales that sleeps 14 people.

It needs a lot of work to it, which is more expensive than I thought, but it focuses the mind. I’ve already put plans in place to buy the next one.

I think it’s really important to www.rec.uk.com

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have a goal and something to aim for – you need that drive and determination each year.

When I’m in the shower at 4:20am being blasted by cold water, it’s important to have something to focus on.

RM: Drive and determination forms only part of the equation – what else do you attribute your success to?

AC: I’ve got good people skills.

I take a genuine interest in the people I meet, from a www.rec.uk.com

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graduate looking for their first job to a senior person who has struggled to get through the recession and needs that next role, I show them both the same level of interest. They can see I’m not in recruitment for a quick buck, I’m in it for the long game. My approach is to bend over backwards for everybody, and treat others the way you’d like to be treated. I have a candidate pack I give to each candidate with documents and advice on writing CVs, interview techniques and tips

on networking. You see them leave the office with a spring in their step and a smile on their face.

RM: It’s important to see things from their perspective.

AC: Yes – it’s about putting yourself in their shoes and thinking what it would be like if I couldn’t find a job. I make sure all my candidate meetings aren’t one-offs, but the start of a lasting relationship. I make sure to keep in touch with my

candidates, even after they’ve found work.

RM: What does the future hold?

AC: I want to build on my current business levels and set the bar higher. I’m considering an MBA as I’m keen to improve my business knowledge and to underpin that with a formal qualification. I think it would be stimulating, challenging and rewarding – plus, it would be a great networking opportunity!

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Legal update

LEGAL ISSUES FOR RECRUITMENT IN 2017

By Lewina Farrell, solicitor and head of professional services at the REC In January it is worthwhile to look over the horizon to see what is coming towards us for the rest of the year. No doubt there will be some surprises along the way but at this stage we know of a number of legislative changes, a major theme of which will be tackling tax avoidance.

• For a number of years each April has heralded yet another tax change affecting the recruitment sector and 2017 will be no different. On 5 December, HMRC published the draft Chapter 10 of the Income Tax (Earnings and Pensions) Act 2003, together with technical guidance which will bring IR35 changes to the public sector. In brief, public authorities will have to determine whether an engagement is ‘inside’ or ‘outside’ IR35. If inside IR35, then the engager, which could be the public authority itself, or the employment business where there is one,

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will be required to payroll the contractor, deduct PAYE tax and employee national insurance, and pay employers’ national insurance. We have a number of concerns about the draft legislation, in particular around the provisions requiring the public authority to provide information to the employment business and the transfer of liability provisions. A consultation on the draft legislation is open until 1 February 2017, with final legislation not expected until the end of March.

• From 6 April 2017 a new VAT flat rate of 16.5% will apply to ‘limited cost’ companies.

That includes personal service companies or ‘miniumbrellas’ supplying labour only. This is in response to a significant growth in such companies registering for flat rate VAT. HMRC expect many companies will deregister for VAT in response to the change.

• The apprenticeship levy applies from 6 April 2017 to all payrolls over £3m. Clearly this will disproportionately affect recruitment businesses because although they run some of the largest payrolls in the UK they won’t be able to avail of apprenticeship levy funding they pay in because of how apprenticeships are defined. HMRC published revised legislation on 14 December 2016, which is also subject to consultation closing on 3 February 2017. That legislation – the Income Tax (Pay As You Earn) (Amendment) Regulations 2017 – sets out the mechanism for calculating and paying the levy, reporting obligations and reclaiming overpaid levy.

HMRC has also published payroll software guidance.

• The revised Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 were published in

December. The Regulations apply to any ‘relevant employer’, namely private/ voluntary sector employers with 250 or more employees on the ‘relevant snapshot date’, which is 5 April in the relevant year. Employment businesses will have to report on the pay of their temporary workers who are engaged on contracts to perform work personally and who they payroll directly.

If there is an umbrella or other intermediary in the supply chain they will be the ‘relevant employer’ for reporting purposes. The first report is due on 4 April 2018 reporting on the period 5 April 2017 to 4 April 2018.

All of these measures will require significant investment in payroll software, contractual changes and due diligence/audit processes.

REC Legal will update members in detail on all of these developments.

www.rec.uk.com

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Inspiration

BEHIND THE SCENES AT THE INSTITUTE OF RECRUITMENT PROFESSIONALS

The View

Dominic Joyce is a senior recruitment specialist at Sheldon n Phillips

Q&A What’s your background and how did you get into recruitment?

Friends and family and even past colleagues, clients and customers have always told me that I’d do well in recruitment.

I enjoy building long-term relationships, helping people achieve their goals and ambitions, along with networking with like-minded professionals, so recruitment is a great fit for my career aspirations.

Developing my skills with sales and customer service jobs along with life experience gained along the way helped me realise the time was right to enter recruitment. My friend and boss, Jamie Trick, saw I wasn’t being rewarded in my current role and saw the potential in me. He gave me an opportunity.

I can say I’ve definitely found my niche within recruitment and I’m looking forward to forging a career for myself within the industry.

What does IRP membership mean to you and what are the best benefits of IRP membership for you?

IRP membership means a great deal to me. I was extremely honoured to be shortlisted for ‘Best Newcomer’ at last year’s IRP Awards. Being recognised by both my employer and the recruitment industry gives me an immense sense of pride, which I haven’t had in the 14 years I’ve been working. IRP’s clear goal is to help members maintain and develop their careers. Even displaying their logo on your website or on your email signature does wonders for your reputation, as I’m a firm believer that within recruitment your reputation is everything.

How will you use your IRP membership moving forward?

My goal is to go onto management within recruitment and support and nurture a team of recruiters. I will use the IRP as an example to tell new colleagues and people I meet within the recruitment industry what it’s given me to help develop and further my career.

Bindu Cardoza is the MD of Jascarm International and an IRP Fellow

WHAT I KNOW How did you get into recruitment?

I saw an opportunity in a local paper that invited people interested in working in recruitment [to come for an interview]. I was intrigued as I have always enjoyed helping people do well so I thought I would apply and see for myself if I could do well at helping people find employment. I knew immediately in the first week that I loved recruitment and I still do as it’s my passion.

Where do you currently work?

I have set up my own company Jascarm International Ltd, as I have always wanted to be my own boss so that I can deliver the type of service that I visualise everyone should adhere to.

What do you love about the job?

The satisfaction of helping another advance in their life, empowering both candidates and clients to make the right choice for themselves, and coaching and mentoring individuals to believe in their abilities.

Would you recommend that job seekers consider recruitment as a career?

Yes – only if they have a genuine interest in helping others succeed, as it the reputation of the recruitment consultant that will dictate their success in the industry. The job finds you and money will follow if you have the passion to do well.

What keeps you in this industry?

The joy of seeing both candidates and clients happy, the monetary rewards after a long day’s work and the satisfaction of being recognised as the go-to person for recruitment support.

To keep up to date with everything the Institute of Recruitment Professionals is doing, please visit www.rec-irp.uk.com

www.rec.uk.com

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Events and training

IRP AWARDS THE REC CELEBRATED SUCCESS AT THE ANNUAL IRP AWARDS. HERE WERE THE BIG WINNERS

RECRUITMENT MATTERS

Membership Department: Membership: 020 7009 2100, Customer Services: 020 7009 2100 Publishers: Redactive Publishing Ltd, 17 Britton Street, London EC1M 5TP. Tel: 020 7880 6200. www.redactive.co.uk Editorial: Editor Michael Oliver michael.oliver@redactive.co.uk. Production Editor: Vanessa Townsend Production: Production Executive: Rachel Young rachel.young@redactive.co.uk Tel: 020 7880 6209 Printing: Printed by Precision Colour Printing

The official magazine of The Recruitment & Employment Confederation Dorset House, 1st Floor, 27-45 Stamford Street, London SE1 9NT Tel: 020 7009 2100 www.rec.uk.com

© 2017 Recruitment Matters. Although every effort is made to ensure accuracy, neither REC, Redactive Publishing Ltd nor the authors can accept liability for errors or omissions. Views expressed in the magazine are not necessarily those of the REC or Redactive Publishing Ltd. No responsibility can be accepted for unsolicited manuscripts or transparencies. No reproduction in whole or part without written permission.

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www.rec.uk.com

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