"BETTER THE devil you know." This is the attitude now being adopted by many previously mobile employees.

Rather than going out into the marketplace in search of a career-improving move, they're battening down the hatches in their current position and waiting for the economic storm to blow over.

Not surprisingly, this attitude is causing a major headache for the recruitment industry, which thrives on churn and mobility in the labour market. "When people are nervous, they don't change jobs," observes Robert Walters, founder of the eponymous recruitment consultancy which now has 38 offices in 17 countries, including Ireland. "If they don't change jobs, we don't make any money and that's the problem. It's not the volume of jobs, it's the velocity of transactions."

Of course, the fact that companies are nervous about hiring doesn't help the situation for recruitment firms either. "Sometimes the sign-off [on hiring] won't happen because people are nervous about their own jobs," Walters says. The decisionmakers are often afraid of being seen as reckless if they hire someone in the current climate, he feels.

This lack of confidence has meant that recruitment has taken a knock across all sectors, particularly financial services, although areas such as risk, compliance and auditing are proving resilient.

Last year, demand for newly qualified accountants was "through the roof", according to Jamie Livingston, director of the Irish operation of Michael Page, a leading US recruitment consultancy. Although there are still positions out there, they have to look harder now, and companies are prizing experienced candidates more highly than those who simply have the qualifications.

In the human resources (HR) sector, the volume of jobs coming on stream has fallen from last year, although HR professionals with experience of restructuring, implementing redundancies and dealing with trade unions are very much in demand.

The slowdown in the volume of recruitment has meant the supply/demand ratio in the labour market has shifted in favour of the employer. Over the last few years, the shortage of talent meant that good candidates could expect to take their pick of jobs. Now the shoe is on the other foot and it's a buyer's market. This means companies have a unique opportunity to headhunt talented people (as long as they don't fall into the "better the devil you know" camp).

"As the market tightens, it's an ideal opportunity for companies with a strategic view on talent acquisition," says Livingston. "Over the next six to 12 months, I think there are going to be fantastic opportunities for companies to go out and hire talent from the competition and pick up very, very good people who otherwise might be unobtainable."

However, companies will need deep pockets for this strategy.

Over the last number of years, many new entrants have piled into the Irish recruitment space. This recession is expected to separate the wheat from the chaff, and could ultimately lead to a better quality of service. "It's going to mean that the people who don't deliver a good-quality service to both clients and candidates are exposed, and those that do will continue and make the industry stronger," says Livingston. Anyone who got into the recruitment game to make a quick buck will find it harder to survive.

Walters founded his firm in 1985, and has weathered many recessions. He expects conditions will continue to be tough for some time yet. Confidence is a huge factor in recruitment, and that won't return for at least a year, he predicts. "So we're in for a tough ride," he says, adding that "in a bizarre sort of way", this recession could be a good thing. "The top players will get better," he says. "We always emerge stronger out of a recession even though we go through pain during it.

"One of the things that we have in our favour is that we have no debt," he points out. The firm also has built up significant cash reserves: "We're in a good place, by luck or judgment, and so we'll ride it through."

His firm doesn't have to worry about the bank manager, he says. "Unless it turns into Armageddon."