Hays warns of sluggish UK jobs market

Hays, the recruitment group, has returned to growth for the first time in two years in spite of concerns over public sector job cuts in the UK, the Financial Times has reported.

The recruiter said net fees – payments from clients less the payroll costs of workers – grew 8% in the quarter to 30 June compared with a year ago, driven by a rebound in Asian economies. All countries in the region were now performing at above pre-downturn levels, Hays said.

The UK remained a weak spot as the government’s plans to shed up to one million jobs in the next five years led to fears of a double-dip recession.

Hays said private sector companies were replacing staff who had left, but were not yet increasing headcount.

Nevertheless, the tentative improvement in hiring had spread to areas surrounding the capital.

Finance director Paul Venables told the Financial Times: “The recovery has gone across the whole of the Home Counties. The weaker areas are in the north of England and Scotland.”

Hays, which has 212 offices in the UK, said the modest improvement in private sector hiring had been offset by cuts to public sector jobs as local authorities became cautious about recruiting staff or replacing leavers in back-office functions, such as accounting and finance.

Net fees fell 6% in the UK and Ireland in the quarter compared with a year ago. The public sector accounts for a quarter of the fees Hays receives worldwide and 40% of its UK business.

With many government projects put on hold until the outcome of this autumn’s spending review, companies are unlikely to boost hiring in the near future, Venables said.

“These are tough times for private sector companies; the uncertainty is difficult. With this in mind, the unemployment rate is unlikely to improve soon.”

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