Do Recruitment Companies Herald a New Downturn

30 April 2009

THE RECRUITMENT SECTOR IS FALLING OFF A HUGE CLIFF

We have had more than 2 dozen enquiries from recruitment companies in the last fortnight.

All these directors are saying the same thing - sales were falling and we were surviving. THEN sales just collapsed.

What does this mean???

Could it mean that, finally, companies are stopping recruitment, cutting costs and shedding staff, this seems to be even happening in London where this fall off has not been seen before in this crunch/recession. I think the signs from this are huge for the economy. Does it mean a big job cull has got under way?

Here are my views:

1. With such a big drop in sales for recruitment companies, all will have lots of debt to Crown creditors PAYE and VAT. But the governments time to pay deal programme won't work. Spreading tax payments out when the debt is based upon a much larger turnover from the past, means future smaller turnover is hobbled by legacy debts. So those that can survive need to dramatically slim down , exit property and do CVA’s to survive.

2. Landlords will be hit hard as space is evacuated rapidly; they will see tough times ahead. Liquidations and CVA's kill leases.

3. Those recruitment companies that survive could grow quickly post 2008-2010 recession. Good opportunities lie ahead for the survivors.

Good luck to all recruitment companies, but make sure you get your costs down HARD and survive.