Recruitment Matters - July 2018

Issue 63 July 2018

RECRUITMENT MATTERS The View and The Intelligence

The big talking point

A united industry

Annual Impact Report

p2-3

Legal Update p4

National Minimum Wage

Policy update p6

REC DISAPPOINTED RECRUITERS DON’T FACTOR IN SCHOOLS

JOBS PORTAL The Recruitment & Employment Confederation (REC) is disappointed the government has left agencies out of plans to introduce a specialist jobs portal for the education sector.

Education secretary Damian Hinds announced in early June a list of measures to help schools curb budgetary constraints, including recruitment costs.

Measures include the creation of a jobs portal for advertising vacancies, a pledge made in the Conservative’s 2017 General Election Manifesto.

REC education policy advisor Chris Russell says changes are needed, but the lack of acknowledgement agencies

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play in education is disappointing.

“Measures taken by the ation Department for Education ment to address the recruitment difficulties faced by schools are necessary.

But at the same time, it is crucial to recognise the important role thatt specialist recruiters in the education sector play nting daily, and it is disappointing ot the government has not recognised this,” he says.

“A recruitment agency is much more ey than a jobs portal. They ecks carry out extensive checks to ensure that those who ools are put forward to schools y are safe, appropriately skilled and the correctt hool. match to work in a school.

They are required by law to set out and agree fees with schools.”

The REC will continue to

UK labour market enforcement strategy

p8

highlight the contribution specialist recruiters make to finding talent, while working alongside schools, teaching unions and the government to promote good recruitment practice.

The REC is also calling upon members in the REC’s education sector to raise concerns directly with its policy team. Members are encouraged to contact Chris Russell directly at chris.russell@rec.uk.com The next REC Education Sector meeting is scheduled for 19 June.

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Leading the Industry

THE VIEW

The industry must unite, says Tom Hadley, REC director of policy and professional services

The REC continues es to lead the way, says Chris Moore, e, chairman of the REC Council

The REC has recently released its Annual Impact Report and it’s good news for REC members. The numbers don’t lie – our impact on both the recruitment and labour markets is unmatched by anyone in our sector.

REC members lead the way in transforming the lives of millions of jobseekers nationwide, and we continue to service the demands of our growing membership.

I’m particularly proud of the way the REC demonstrates the powerful and positive impact recruitment has on the UK economy by its extensive media coverage. To be a strong industry and a force for transforming people’s lives, we need to have a voice that is respected and listened to.

The REC does that.

We have responded to members’ calls for products and services to prepare them for 2018’s General Data Protection Regulation (GDPR). Last year saw the REC lead the industry by hosting GDPR seminars nationwide and publishing an exclusive hub with a wealth of GDPR materials to ensure members remain compliant.

LET’S COME TOGETHER The REC is focusing on making recruitment a career of choice. This is something that I am pleased to see the REC working hard on, with its increasing levels of recruitment businesses becoming IRP advocates and individuals joining IRP and taking exams year-on-year.

The UK recruitment industry is in a strong position.

The REC’s Recruitment Industry Trends 2016/17 report found the industry worth £32.2 billion. We anticipate industry turnover will grow, albeit at a slower pace, which is why we are continuing our Scale Up campaign through to 2020.

In 2017, the REC fought recruitment’s corner on GDPR, on taxation policy, immigration, procurement, skill shortages and the post-Brexit landscape for employment.

2018 is a year of change for the REC, marked by the arrival of our new chief executive Neil Carberry on 25 June.

But 2017 has proven that we are a strong organisation well-equipped to meet challenges and lead the industry into the future.

“IN 2017, THE REC FOUGHT RECRUITMENT’S CORNER ON GDPR, ON TAXATION POLICY, IMMIGRATION, PROCUREMENT, SKILL SHORTAGES AND THE POST-BREXIT LANDSCAPE FOR EMPLOYMENT” 2 RECRUITMENT MATTERS JULY 2018

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The input from members is the lifeblood of our policy, legal and compliance activities. As well as fuelling our campaigning work and support services, this dialogue provides a unique insight into how the recruitment landscape is evolving and how external developments might have an impact. Our forthcoming members’ week is good opportunity to reflect on the importance of this ongoing two-way exchange.

A concrete example is our work on the Matthew Taylor review, which has involved direct engagement with over 400 members, ensuring that our responses to government are built on practical insight. New consultations on IR35 and labour market enforcement will provide further opportunities for involvement. As well as contributing to a strong collective industry voice, members are using the heads-up on policy developments as a key differentiator with their clients; this chimes with the latest REC JobsOutlook, which shows that service quality and expertise are now deemed proportionally more important to employers than cost.

The ongoing dialogue with members is also providing a great insight into how recruiters are stepping up and helping clients to address increasing candidate shortages. According to JobsOutlook, eight in 10 (80%) employers said that they were satisfied with the candidates presented by their agencies – up from 75% in the previous quarter. This is a phenomenal outcome considering the tightening availability of talent.

Agencies are innovating and working harder than ever to meet employers’ requirements. One of our ongoing priorities is to showcase specific examples of this, particularly in areas such as boosting opportunities for under-represented groups. This was a key theme of our recent discussions with Sarah Newton, the Minister for Disabled People, Health and Work and is a core component of the Good Recruitment Campaign. Ensuring that a future UK jobs market is ‘allinclusive’ is also at the heart of the work we are taking forward on the back of our Future of Jobs Commission.

Members’ week is just one of the channels for driving this ongoing and mutually beneficial exchange of intelligence and thought leadership on current and future labour market challenges.

You can follow Tom on Twitter @hadleyscomment nt

www.rec.uk.com

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2.5%

THE INTELLIGENCE RETAIL RESEARCH

Thalia Ioannidou, REC senior researcher REC research is always produced with our members in mind, whether that’s through policy and labour market research to promote a buoyant jobs market or member research to help recruiters be as successful as they can be within their own business. One sector of recruitment that we’re often asked about is the retail sector, especially in light of the EU referendum result as this sector is particularly reliant on EU labour. Our June 2017 report ‘Building the Post-Brexit Immigration System’ found that: ‘In the vast majority of UK regions, retail is among the top three sectors hiring EU nationals.’

The REC’s monthly Report on Jobs survey of recruiters now includes a year’s worth of

INDUSTRY WORKFORCE COMPOSITION SHIFTING The latest data from Recruitment Industry Benchmarking (RIBIndex), measuring participating companies’ performance, shows that there has been a shift in the workforce composition of the median recruiter over the last two years, as evidenced by a decline in the proportion of fee earners.

Whilst there was just a small downward movement

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data specifically on the retail sector and will continue to update on this monthly. As we only have one year of data so far, we cannot seasonally adjust the data for the retail sector. Therefore, we rather unsurprisingly saw demand for temporary retail staff fall in both January and February 2018 after the Christmas peak before then increasing again in March. However, for permanent retail hiring, demand for staff fell in April 2018. Moreover, when looking at the data for the year-todate, demand for permanent retail staff was increasing at its fastest rate in April 2017.

Other sources have highlighted a range of factors that have led to a challenging period for the retail sector more broadly including rising inflation and low consumer confidence. After several years of low inflation, the Consumer Price Index has been at 2.5% or higher for the past year and the GfK (Growth from Knowledge) Consumer

CONSUMER PRICE INDEX HAS BEEN AT 2.5% OR HIGHER FOR THE PAST YEAR AND THE GFK CONSUMER CONFIDENCE BAROMETER HAS MEASURED CONSUMER CONFIDENCE AS NEGATIVE SINCE MID-2016.

Confidence Barometer (which is reported in the REC’s monthly JobsOutlook report) has measured consumer confidence as negative since mid-2016.

Additionally, a number of household names among high street retailers such as Toys R Us and Maplin have gone into administration this year, whilst others such as Mothercare, New Look, and Poundworld are closing stores and putting thousands of jobs at risk. By contrast, the ONS reported online sales reached a new high in March 2018, accounting for 17.4% of all retailing in the UK. From a labour market perspective, this suggests a growth in warehousing and delivery roles at the expense of customer service retail.

Fee earners as a percentage of all employees, for the median recruiter, Q2 2016-Q1 2018 100% 90%

80.1%

80%

78.8%

77.7%

77.1%

78.0%

74.6%

75.0%

71.7%

69.5%

70% 60% 50% 40% 30% 20% 10% 0% Q1 2016

Q2

Q3

Q4

in the percentage of fee earners amongst the total workforce between Q1 2016 and Q1 2017, a more notable

Q1 Q2 2017

Q3

Q4

Q1 2018

change has occurred over the last year.

Between Q1 2017-Q1 2018, the proportion dropped from

BY CONTRAST, THE ONS REPORTED ONLINE SALES REACHED A NEW HIGH IN MARCH 2018, ACCOUNTING FOR 17.4% OF ALL RETAILING IN THE UK.

However, recent data suggests there may be some light at the end of the tunnel for high street retailers. The ONS’s May 2018 UK Labour market bulletin recorded pay rising above inflation for the first time since January 2017 and the JobsOutlook report for May 2018 shows that more employers think economic conditions are getting better than getting worse for the first time since July 2017.

If economic conditions continue to improve, consumer confidence may begin to rise again and improve the fortunes of both retailers and the recruiters who support them.

78% to just under 70%. An increase in the deployment of resourcers and support staff to improve the productivity of the fee earner, is one key potential reason for the change.

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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The Big Talking Point

ANNUAL IMPACT REPORT BIG WINS... ON POLICY

DEEP IMPACT The REC released its Annual Impact Report earlier this month, highlighting the organisation’s biggest wins over the past 12 months.

Recruitment Matters looked into the report and pulled out some of the big numbers

• 36 consultation responses and proactive submissions to government • 34 meetings with government ministers, MPs and government departments • 2 meetings at Number 10 Downing Street • We presented our ‘Ready, willing and able?’ research in Parliament twice – once to the House of Lords Liberal Democrat Brexit Committee and once at the UK Warehousing Association’s annual parliamentary luncheon • More than 70 policy newsletters, briefings and sector group updates sent

REC – BY THE NUMBERS MORE THAN

2,500

recruiters attended an REC event in 2017

25,000 total downloads of the REC Scale Up Podcast

£32.2bn

MORE THAN

68,260

the total industry UK turnover*.

What recruiters do matters.

Jobs transform lives. As the largest professional body for recruitment, the REC champions the value that recruiters deliver by working tirelessly to raise the profile of our members and helping to improve the reputation of the industry.

Find out more about the impact of the REC at www.rec.uk.com/ourimpact

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* Recruitment Industry Trends 2016/17

minutes of member engagement

137

open and in-company learning courses delivered

10,627 IRP members

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...ON MEDIA • 3,035 total media hits in 2017, 376 more than in 2016 • 721 targeted media hits, 88 more than in 2016 • 77% increase in online media impressions • In 2017 we achieved a 58% increase in coverage by City AM since 2016 and doubled our coverage in The Telegraph. We achieved a 17% increase in coverage by the Daily Mail • We were mentioned on TV and radio 481 times in 2017, including 61 times on LBC, having not featured on the station in 2016 • Our spokespeople were interviewed on TV and radio 49 times

...ON PROFESSIONALISING THE INDUSTRY

...ON LEADING THE INDUSTRY

...ON BEING BELIEVERS IN GOOD RECRUITMENT

• On track to get 11, 500 IRP members by the end of 2018 • The latest two-yearly test cycle was launched in January 2017: 30% of members have passed the test to date (end April 2017).

• By the end of year more than 97% of members will have taken and passed the test • Became EPAO for recruitment apprenticeships • Increased numbers of apprenticeship centres by 50% • Launched new L3 Certificate in In-House Recruitment

• Hosted our second highprofile round table of 2018, with the Secretary of State for Work and Pensions, Rt. Hon Esther McVey MP • Re-signed the formal agreement with the Department for Work and Pensions • Partnered with Women in Work All Parliamentary working group • Launched the REC Future of Jobs Ambassadors campaign

• On track to get 400 signatories to the Good Recruitment Charter by the end of 2018 • More than 250 HR directors and key resourcing decision makers due to attend TREC 2018 on 4 July 2018

34

MORE THAN

600

39,568

0

members actively involved in policy work

incoming queries to our legal helpline and customer contact centre.

meetings with government ministers, MPs, and government departments held

p

25%

41,574

2

meetings held at Number 10 Downing Street

of REC members passed the Compliance Test mid two year cycle (compared to 19% in 2015)

views of the REC Blog (14.42 per cent increase compared to 2016)

39,224

ny

answers given

721

appearances in national newspapers or recruitment/HR titles www.rec.uk.com

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3,035 total media hits

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Legal update

NATIONAL MINIMUM WAGE

By Bunmi Adefuye, solicitor and commercial adviser at the REC

UNIFORMS AND NATIONAL MINIMUM WAGE National Minimum Wage (NMW) underpayment affects thousands of workers.

HMRC’s targeted inspections and enforcement strategy forces employers to pay close to attention to what will constitute a reduction in wages, especially when a worker is paid NMW or a slightly above.

In March, HMRC named and shamed 179 employers who did not comply with the National Minimum Wage Regulations 2015 (NMW Regulations). Surprising, some very large employers were exposed because of their uniform policies, as they misunderstood how the NMW Regulations applies to uniforms.

Most workers are entitled to be paid at least NMW provided they work in the UK under a contract and are of compulsory school leaving age. Under the NMW Regulations, certain

deductions from pay or payments due from the worker in a pay reference period will be treated as a reduction for the purpose of calculating a worker’s total pay.

Under the NMW Regulations, employment businesses that have directly engaged their workers will be deemed to be employers.

The cost of a uniform is expenditure in connection with the worker’s employment and the NMW Regulations prevent employers from either charging workers upfront or making deductions to their wages that will take the pay below the NMW in a pay reference period for such expenditure.

If the NMW rates are breached, the employer must make up the difference during the pay reference period and bring the worker’s pay back up to the NMW. The difficulty with uniforms

is that even if the worker can use the items for other occasions because they are not branded but generic – such as black shoes or black trousers or even white t-shirts – the cost should still be considered for NMW purposes because wearing those items is a requirement by the employer for the role.

The Conduct of Employment Agencies and Employment Businesses Regulations 2003 also applies, as it restricts the employment agency and employment business from requiring workers to pay for additional services in order to obtain work-finding services.

Therefore, they should not charge workers for a uniform as a condition for providing their service.

HMRC has a technical manual (found on the government’s website – www. gov.uk), which provides this advice on required uniforms:

“As a condition of employment an employer may require workers to wear specific uniforms. If the employer requires the worker to purchase specific items, such as overalls, then any deductions made from pay or payments made to the employer in respect of those items will always reduce National Minimum Wage pay.

“If a worker makes a payment to a third party for required uniforms the payment will also reduce National Minimum Wage pay since it is expenditure incurred in connection with the worker’s employment.”

Going forward, if your workers are receiving pay that is close to the NMW, it may be worth agreeing with the client who will bear the cost of the uniform in order to limit the risk of taking the workers’ pay below the NMW and avoid being named and shamed by HMRC.

IS CONTRACT FLEXIBILITY THE SECRET TO RETAINING TOP IT TALENT? Retaining top talent is a challenge facing most, if not all, recruitment firms. Providing staff with the right technology can facilitate flexible working and promote a better worklife balance. A flexible IT contract can make potentially huge cost savings to reinvest back into staff while providing them with the best tools to do their jobs.

When reviewing your IT contract there are three key areas to consider: 1) Staff turnover: if your staff members

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vary month-to-month it could mean you are paying excess IT costs.

A fixed price contract does not take into account staff reduction or a gap between leavers and joiners.

On a flexible contract you only pay for the support, licensing, telephone and mobile contracts for the exact amount of people employed. Amounting to potentially huge cost savings over 12 months.

2) IT system regret: ever purchased software or IT support that you

regretted? A good IT provider can add or remove systems and software when they are needed, retired or replaced – saving your business money.

3) Upscale, downscale and M&A: businesses change size for all sorts of reasons.

A flexible, monthly IT contract means your business can expand or reduce in size while keeping costs low – without being locked in.

Laura Tyson, Redstone Connect

www.rec.uk.com

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Inspiration

BEHIND THE SCENES AT THE INSTITUTE OF RECRUITMENT PROFESSIONALS

The View

Jessica Kitchin in is a permanentt consultant at Hamblin Employment Group

Yasmin Bryant is a divisional manager at CSG

Q&A

DAY IN THE LIFE

My typical day…

Typical day? Is there ever such a thing as a typical day in recruitment? I tend to arrive at 8.30am, check all emails and fight fire accordingly. Check in new starters, interview various candidates and assess their suitability for our many vacancies.

I attend client meetings and lobby for new business. If it’s quiet in the office I might make some calls but then if new vacancies come in I drop everything to fill them. It’s an ever-changing environment and that’s why I love it.

My alarm goes off...

I usually check my emails first thing on my mobile at about 6am. After feeding my cat Tilly and having fruit and yogurt for breakfast, I head into the office for around 8am.

My most memorable work moment…

Was meeting with a new start-up company on the Isle of Man and going on to place all their initial staff, some of whom were flown to Australia for training. It was amazing to have been involved from conception and see the company grow. Seven years on we still recruit for them.

My most challenging placement…

I think every placement is a challenge because you’re relying on so many factors. You secure the role but can you find the candidate? Candidate gets an interview but will they be successful? Candidate gets a job offer but will they accept?

Candidate accepts but will current employer counter offer? In most industries, if you provide a service – you get paid; we can work our butts off, but until a candidate has actually started we never know that it won’t all fall through – and even then, we have a 12-week refund period to get through. You can do all the candidate control in the world but unfortunately you can never predict or control people. If I had to name the most challenging placement I would say it was the logistics of recruiting someone from India. It took 10 months to find this person and after four Skype interviews he was flown to the Isle of Man for a face-toface presentation. We then had the challenge of his visa and relocating him to the Isle of Man.

I’m responsible for… … the UK-based Consumer team, managing business and also working on their development and growth. Making sure that the team are all continuously improving whilst also enjoying what they do is a challenge but so worthwhile!

I got the job…

When I first graduated I was working three jobs and wasn’t sure where I wanted to focus my career. I watch the film Friends with Benefits and after seeing Mila Kunis’s performance as a headhunter, I really liked the idea of doing it for a career. I had found my calling! I knew someone that worked at the headhunting firm BW Penman, one of the recruitment agencies that formed CSG. My contact was able to recommend me for an interview and my career took off from there.

My typical day…

A typical day for me consists of a wide range of activities, which every executive search consultant will perform. I speak with candidates for the roles I am hiring for, or more generally, listen to their stories to help them in their career progression. Sometimes I feel a bit of an agony aunt but it really helps to be able to understand candidates’ issues. I also lead daily meetings with my team to check their plans for the day, mainly to ensure that our forecasting and pipeline are on track. As manager it is my responsibility to make sure that the team is continuously profitable.

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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What’s coming up?

5 THINGS RECRUITERS MUST KNOW ABOUT THE UK LABOUR MARKET ENFORCEMENT STRATEGY

By Philip Campbell, REC policy team leader 1. The Employment Agencies Inspectorate (EAS) should be beefed up The Director of Labour Market Enforcement Sir David Metcalf CBE highlighted that while EAS is responsible for regulating 18,000 agencies who engage over 1.1 million agency workers, it only employs 12 people on a budget of £750k. Sir David recognised that it’s time for EAS to receive some much-needed Tender Loving Care and has recommended an increase in its budget.

However, this wouldn’t come without some changes. In fact, he is calling for EAS’ remit to be expanded to include other intermediaries such as umbrellas and potentially the Agency Workers Regulations (AWR). He has also called for EAS to take a more proactive approach to enforcement, not just responding to complaints along with a website revamp and clearer advertising. We support this much-needed promotion of EAS amongst work seekers and agencies.

2. National Living/Minimum Wage Naming and Shaming process could be reformed While recognising that the fear factor of naming and shaming is having a powerful effect, Sir David highlighted some of the inadequacies of this process.

For example, while it tends to work for larger employers, it doesn’t tend to have the same effect for smaller employers.

It doesn’t distinguish between serious underpayments and simple administration errors. Finally, it doesn’t allow employers to learn from other employers’ mistakes. Sir David has therefore recommended a review of how naming and shaming is working, for BEIS and HMRC to review guidance of NLW/NMW in collaboration with stakeholders, for case studies should to be provided, and a greater focus should be on serious non-compliance.

This is very welcome.

much designed for permanent employment and don’t tend to work for ‘atypical workers’ particularly agency workers.

He shows a preference for rolling up holiday pay as this allows agency workers to receive their holiday pay in real time, but recognises that this is currently prohibited. He has recommended that in the long term HMRC enforce the payment of holiday pay, like they do for NMW, and interim EAS and GLAA investigate this as a matter of priority. We believe that before HMRC can do this the regulations need to be clarified for how they apply to agency workers.

3. Holiday pay is in the spotlight One of the areas that Sir David is particularly concerned about is workers not receiving the holiday pay they are due.

He cites alarming figures of alleged non-payment of holiday pay and shines the spotlight on agencies in particular. He does admit he has not been able to corroborate these figures, and at this stage, his figures are based on one or two sources. We do not think these figures are correct and will be raising this in future discussions. However, he does raise a valid point, which is that the Working Time Regulations were very

4. Calls for joint responsibility for the endclient of their supply chain In order to ensure compliance throughout a supply chain, Sir David has recommended that some joint responsibility measures be introduced where the brand name at the top of a chain bears some joint responsibility for noncompliance found further down the chain. He doesn’t endorse full joint liability found in some other European countries but instead suggests a softer process where if noncompliance is found, followup action by enforcement agencies, in conjunction with the brand name and supplier,

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would be undertaken in private to provide an opportunity to prevent the infringement.

However, if this isn’t correct this could result in a naming and shaming of the brand and the supplier. It is hoped that this would give leverage to greater compliance in the supply chain, with the end client wanting to protect their brand and therefore taking more due diligence for their supply chain. This is something we welcome.

5. Currently isn’t enough evidence for an extension of licensing While Sir David found many stakeholders were enthusiastic for an extension of licensing into other sectors he failed to find any sufficient evidence that this would improve compliance.

He also noted that licensing had previously been tried in the recruitment sector and removed as it wasn’t effective.

He has, however, highlighted the problems in the nail bar and car wash sectors, so has suggested a pilot licensing system of businesses (a move away from labour providers) in these sectors. For those calling for licensing in other sectors, he has now put the onus onto stakeholders to provide the evidence of why this would be the best option.

Membership Department: Membership: 020 7009 2100, Customer Services: 020 7009 2100 Publishers: Redactive Publishing Ltd, 78 Chamber Street E1 8BL. 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 © 2018 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.

Tel: 020 7009 2100 www.rec.uk.com 8 RECRUITMENT MATTERS JULY 2018

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