By Max Clarke

In response to the employment figures released from the Office of National Statistics (ONS) this week, Edward Winterton, Bibby Financial Services’ recruitment finance specialist, says:

“It was inevitable that further cuts in public sector spending in the three months to October 2010 were going to have a detrimental impact on the UK jobs market. As a result, the release of the latest ONS figures shows the employment rate has declined by 0.1 per cent during this period, the first quarterly fall since Q1 this year

“With the number of people employed in the public sector falling by 33,000 on the quarter, and the number of people employed in the private sector remaining unchanged at 23.11 million, it is clear that the private sector has not managed to offset the job losses in the public sector. This is due to a clear lack of demand for jobs within the private sector.

“Despite this disappointing news, there is hope on the horizon with the latest CIPD/KPMG quarterly jobs survey indicating that private sector job creation in the lead up to Christmas will more than counteract public sector job cuts towards the end of 2010. However, what remains to be seen is how much of this good news is merely a pre-festive season surge in private sector jobs or evidence of a sustained improvement that will continue to offset large scale public sector job cuts in 2011.

“On the one hand, if the private sector manages to sustain its pre-festive momentum and we see an increase in vacancies in 2011, this could open up prospects for recruitment agencies looking to take on more candidates and encourage growth. However, should the private sector fall short of absorbing the job losses from the public sector, recruiters will be faced with the challenge of placing more candidates in fewer positions, sparking increased competition among the industry.

“Whatever the future holds, one thing remains certain. Preparation for further challenges is everything over the next critical few months and recruitment agencies should remember that a healthy cash flow is intrinsic to survival. With this in mind, it’s imperative that recruiters have a steady flow of funds into their business to relieve the worry of cash flow difficulties and enable them to focus on driving their business forward into 2011 and seizing new opportunities for growth.

“Alternative cash flow funding solutions, such as invoice finance, can enable recruitment firms to do this by providing them with an immediate and on-going injection of cash into the business against the value of outstanding customer invoices as soon as they are issued. Outsourcing back office functions, such as payroll and credit control, as well as ensuring a regular and smooth flow of cash into the agency, can also save recruiters valuable management time, allowing them to concentrate on driving their business through these difficult times ahead.”