• creditsafe_simplysmarter_RGB_200Last year 1,489 new recruitment companies were established in the UK
  • Average credit rating of recruitment firms rose from 46.8 in 2012 to 49.0 in 2013
  • Proportion of recruitment firms in lowest Creditsafe rating band fell from 15.4% to 12.4%

The UK recruitment industry is in good shape and ready to meet the demands of a rejuvenated economy and job market, according to new analysis from Creditsafe.

During the recession, poorly managed and over leveraged recruitment companies went out of business and only the strongest survived. There were 229 fewer recruitment companies in existence at the end of 2013 than at the same time in 2012 (23,323). Creditsafe’s analysis indicates many recruitment companies were ill equipped to survive the prolonged effects of the financial downturn. While in sectors such as the construction industry the ‘pain’ was felt earliest during the recession, with firms rapidly entering insolvency, the analysis reveals that for many professional services firms the pain was felt later with firms going under while the economy was actually starting to pick up on a macro level.

While hundreds of established firms struggled at the start of the up-turn, the environment did also provide a fertile environment for new market entrants. The research revealed 1,489 new recruitment companies set up shop in 2013, representing 6.4% of the total of 23,352 registered firms.

Creditsafe’s credit ratings, which are powerful predictors of company insolvency, improved for recruitment firms from 46.8 to 49.0 between 2012 and 2013. A further indicator of the changing profile of the creditworthiness of recruitment firms was the fact that just 12.4% were in Creditsafe’s highest risk band in 2013 compared to 15.4% in 2012 while one-in-eight (12.3%) were found in the lowest risk band in 2013, compared to just 10.6% in 2012*.

Creditsafe’s analysis further shows that the UK recruitment sector remains largely a home-grown business. Despite the ‘globalisation’ of the labour market only 1.8% of recruitment and labour agencies have an ultimate ‘foreign’ owner, although this is higher than other professional services sectors such as accountancy and legal services where the percentages are 0.2% and 0.6% respectively.

Source: Creditsafe UK