The recruitment business is a good barometer of an economy's strength and, in the current slowdown, matching people and jobs is not the booming business for some that it once was. But recruitment companies specialising in engineering, construction, healthcare, education and the public sector report good growth.
Most recruitment companies are confident of "steady but not spectacular growth" in business in 2002 with firms recruiting for the healthcare, pharmaceutical, biotechnology and construction sectors expecting strong growth.
"When employers get nervous about the economy they stop recruiting but the first thing they do when some confidence returns is start hiring again and we are positive that there will be growth in this business in 2002," one recruiter said reflecting the general sentiment.
Another recruiter referred to the "strong pipeline" of companies examining the Republic as a possible location for new operations as indicative of potential business growth next year.
But 2001 has been a difficult year for many recruiters, particularly those specialising in IT.
"There have been big changes in our industry. We have grown up a lot. We had huge levels of growth and a huge number of new entrants. Demand eased off over the past year in most sectors. But it was an easing from an unprecedented high, especially in the IT area," according to Mr Aidan McGennis from Marlborough International.
The boom in the recruitment sector in the mid to late 1990s reflected strong growth in the Irish economy. Demand from employers for new staff began to pick up in 1994 after the difficult years of the early 1990s. Rapid growth in 1996/1997 continued through 1998 and 1999.
Growth began to level off towards the end of 2000 and 2001 was "a pretty flat year" for many recruitment companies as the economy slowed down and job losses rose.
Real gross domestic product growth slowed to an estimated 5 to 7 per cent this year from 11.5 per cent in 2000. By November, unemployment had risen to 4.1 per cent from 3.7 per cent in April, while the National Household Survey (June to August) showed 79,500 people unemployed, up 14,100 on the May figure. The uncertain outlook is evident in the wide disparity of growth forecasts for 2002, which range from less than 1 per cent to 7 per cent.
Concern about how international economic problems would impact on the Irish economy and export markets caused employers to put hiring decisions on hold from the second quarter of the year, while there was few new international companies setting up here, according to recruiters. The September 11th terrorist attacks accentuated fears of a US recession and the knock-on effects on other economies and on markets for Irish exports.
"Uncertainty in the broader economic market is not good for recruiters especially in the short term," Mr McGennis said. In 2002 he is expecting "steady as opposed to rapid growth in business".
Estimates of the total recruitment market turnover vary widely - between £250 million (€318 million) and £500 million.
Recruitment companies are reluctant to discuss their own employment or performance figures "for competitive reasons". But falling revenue this year has forced some companies to trim cost bases and industry sources report "fairly heavy" job losses within the sector.
Marlborough, one of the largest recruiters, now employs 180 people, down from a peak of 300 some 14 months ago.
Employment agencies must be licensed by the Department of Enterprise, Trade and Employment and licences must be renewed annually. This year some 650 licences have been issued or renewed, up from 272 in 1997. The market is fragmented, with a large number of small, privately owned players, some specialising in particular sectors, a small number of large firms and some subsidiaries of international groups.
With the change in conditions over the past year, the performance of new companies has largely depended on which areas of the market they serve. British group Beresford Blake Thomas (BBT) set up an Irish office 18 months ago. BBT Ireland manager Mr Barry Prost said the operation, which specialises in construction and engineering and health and social care, produced "substantial" turnover in 2001 and expected to at least double this figure in 2002. Efficient recruiters who offer a superior product and service to candidates and clients will do well next year, he forecast.
There are only two Irish publicly quoted recruitment companies - Marlborough and CPL Resources. Their share price experience gives some indication of the state of the business.
Marlborough floated in Dublin and London in 1997. The shares hit a high of €5.35 in 1999. They are now trading at 29 cents, well off their 2001 high of €1.45 and their €2.60 high in 2000.
CPL, which started as an IT recruitment specialist but has expanded into other areas, floated in 1999. CPL shares reached a high of €1.70 in 2000 and are currently trading at around 30 cents, from a year 2001 high of 95 cents.
CPL chief executive Ms Anne Heraty said demand is good on the financial side for accountants, credit controllers, part-qualified accountants, technicians and candidates placed on contract. Placing people on six- to 12-month contracts is a growing business because employers want the flexibility it offers, especially employers who are coming back into the market after a spate of layoffs, she explained.
Despite cutbacks in the technology sector, the IT people who have come on the market are getting new jobs, mainly in security, internal audit and contracting, she explained. In 2002 she expected strong growth in the contracting side and in demand for financial and office support staff, while "pockets" of the technology market could do well. Overall, recruiters are confident that business will be better in 2002.
