Issue 27 July 2015
RECRUITMENT MATTERS The View and The Intelligence Working with the new government and the state of the jobs market p2-3
Visa salad Is the UK’s visa system turning away the brightest global student talent to our detriment? p4
Legal update and the IRP The impact of possible changes in employment law and inside the IRP p6-7
TALK TO US, REC TELLS DEPARTMENT OF HEALTH The Recruitment & Employment Confederation (REC) is calling on the Department of Health to meet with it about changes to NHS trusts’ spend on agency nurses
Health secretary Jeremy Hunt told the NHS to cut its soaring £3.3bn bill for agency staff, calling for an end to the “extraordinate” rates charged by some agencies. Many hospital trusts have had difficulty attracting enough extra skilled staff and have relied on agency personnel to fill their rotas. REC director of policy Tom Hadley says the health
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secretary’s comments are disappointing. “The language and tone from Jeremy Hunt is outrageous. Agency nurses play a vital role in ensuring safe staffing ratios and quality patient care in an NHS that cannot find sufficient permanent staff,” he says. Hadley says the secretary is using agencies as a scapegoat for the NHS’s own
mismanagement of workforce planning. “We are disappointed that the Department of Health has not consulted around the introduction of these new rules and await more detail about exactly how they propose to reconcile them with NHS trusts’ legal responsibility to ensure safe staffing levels on wards.”
Events and training How to write an awardwinning entry and how the REC’s Manifesto for Jobs is helping the industry p8
NHS agency supplier Talent HCM says NHS staff levels need more attention. “To some extent, temporary staff expenditure has risen after the publication of the Francis Report, which has meant hospitals have needed to put more staff on wards,” says Talent HCM operations director Sarah Heales. “But there is a disconnect between the size of the existing NHS workforce and its current needs.” The chief executive of the NHS Confederation Rob Webster says the health sector needs to examine what’s important. “We need a focus on the workforce, on prevention, on the role of innovation and new models of care,” he says. “It will mean new relationships across sectors and with the public – as well as using the money well if we are to forge a better future.” For more information about the REC’s Health & Social Care sector group, visit www.rec.uk.com/ nursingandsocialcare
www.rec.uk.com 15/06/2015 15:35
Leading the Industry
THE VIEW We now have a new Conservative government. So what does this mean for the recruitment industry? asks Kevin Green, REC chief executive Well, on one level it means less intervention in the labour market, which is what we have called for consistently over the last few years. Our jobs market is the envy of most other large economies and we feel that the private sector should be allowed to focus on creating wealth and jobs. We are supportive of always making work pay. This benefits business but it also gets more people into work so they can support their families and male a valid contribution to society. We expect the government to push again to reduce the burden of red tape and outdated regulations, which we also welcome. Where we will be pushing the government to go further and faster is on improving education. Our most important competitive advantage is the knowledge and skill of our workforce, so our young people need to be as well-prepared for the world of work as they can be. Creating a world class careers service is essential. We should guide young people on what to study, and advise them on what employers are looking for and how they should prepare themselves to get their first job. We also want to see more investment in vocational quali-
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Here are some simple calling cards for the new government, says Tom Hadley, director of policy and professional services at the REC
fications and employer-led apprenticeships. An area of huge debate will be around whether the UK should remain within the European Union. We think that continued membership is in the best interests of UK business and our economy. We have always believed that the EU needs to be reformed, with less focus on regulation and more on supporting trade. We hope the Prime Minister is successful in convincing our European colleagues that reform will not just be good for the UK, but also for the rest of Europe. We will engage actively with our members around this issue. It’s clear we will not all agree but an informed and sensible debate is important to ensure that the right decision is taken. We expect to see a different approach to immigration for the new government. We believe that immigration has been predominantly positive for the UK. When people come here to work and make a contribution it’s good news for all. We feel the government is going too far on limiting accesses to skilled employees from outside the EU and this could have very negative consequences for British business. As always, you can depend on the REC to fight our industry’s corner. We will ensure your voice is heard. You can follow Kevin on Twitter @kevingreenrec
FINDING THE RIGHT PITCH There’s been a veritable flurry of post-general election activity at REC HQ. What hooks can we use to drive our own policy priorities with the new government and what are the best levers for building our links with new ministers and MPs? The last few weeks have provided a good reminder of what the REC’s best calling cards are when it comes to building our relationships with the political elite. Here’s a few: Legitimacy – The fact that we represent over 80% of the recruitment industry by turnover is an important part of our ‘pitch’ and opens doors to senior levels of government. Equally important is the specific insight provided by the REC’s 19 sector groups and our ongoing work to coalesce other organisations around key jobs market issues (the ‘Expert View’ collection of essays is a great example of this). Authority – Regular jobs market data generated through JobsOutlook and the REC/KPMG Report on Jobs provides instant credibility and underpins our key asks to the new government. For example, the fact that candidate shortages are on the rise and are likely to become even more acute (80% of employers plan to hire more staff over the next 4-12 months, according to JobsOutlook) underlines the need for policies to address the current skills disconnect. The regular insight we get from REC members across all sectors complements this data and research. Proactivity – As well as responding to the latest government consultations, we are in the business of putting forward proactive solutions to major jobs market challenges. This is the core aim of our Manifesto for Jobs and has driven our input into recent initiatives linked to older workers and gender equality in UK boardrooms. The Good Recruitment Campaign, the Flexible Work Commission and the Youth Employment Charter are just a few other examples. Our pitch to the new government is sweet and true: harness the knowledge and expertise of our industry and work with us to build the best jobs market in the world. You can follow Tom on Twitter @hadleyscomment
THE INTELLIGENCE Nina Mguni, senior researcher at the REC, asks if the jobs market will stay in good shape
The new UK government begins its five-year term in a buoyant mood. Less than a week after the general election, the Office for National Statistics (ONS) published labour market statistics for period January to March 2015. With 31.1 million people in employment, and an employment rate of 73.5%, this is the highest rate and number in employment. This was also complimented by highest number of vacancies at 733,000. And further good news was included in the ONS data. With growth of average wages (without bonuses) at 2.2%, alongside an inflation rate of 0% at the time, and with
KEEP AN EYE ON THE PROFITS Last month we talked about continuing revenue growth for UK recruiters, with 15 consecutive months of growth and the median RIB (Recruitment Industry Benchmarking) recruiter seeing double digit revenue growth, but we also expressed some concern at signs of tightening profitability (Figure 1). Tightening net profit margin partly stems from declining NDR margin, with median NDR margin declining nearly 5% from 28.3% in
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subsequent negative inflation, working people should see real wage growth. Following on from the significant changes we have seen in the last seven years, this will feel like welcome relief. However, there are some meaty issues that will preoccupy the new government. In a report the Recruitment & Employment Confederation published in March this year, ‘Building the best jobs market in the world’, we invited a number of political, economic and business commentators to discuss the main issues for the labour market. The book of essays offered a range of views about some of main challenges, as well as opportunities that will face the next government. There was common agreement among the commentators that the historical tie between economic demand and jobs has unravelled somewhat. During the economic
PEOPLE IN EMPLOYMENT
GROWTH OF AVERAGE WAGES WITHOUT BONUSES
downturn, employment levels did not correspond with GDP in the way we would expect. Nonetheless, the main challenge is to sustain levels of employment, demand for jobs and wage growth, while addressing poor productivity in the economy. Wage growth often goes hand in hand with productivity. In an article by Robert Peston from the BBC, he estimates that had productivity continued the trend between 1992 and 2007, wage growth would have averaged 15% compared to the 2% we have seen in recent times. This is a stark reminder of the cost of poor productivity. ‘Building the best jobs market in the world’ concludes with views on what the
Figure 1 - Recruiter Net Profit Margin 12
■ Upper Qtile ■ Median ■ Low Qtile
10 8 6 %
OUT OF THE WOODS YET?
4 2 0 -2
January last year, to 23.5% in March 2015. We believe that this is partly due to change in the composition of recruiter revenues, with permanent and temporary revenues growing at low double digit, while contract billings are declining at around 10% over the last 12 months.
With a higher proportion of lower NDR margin temp revenues, and a lower proportion of higher margin contract Billings, the overall margin falls. Nevertheless, there are signs that underlying profitability is falling, with median fee earner costs to NDR
31.1 M 73.5% 733,000 EMPLOYMENT RATE OF
HIGHEST NUMBER OF VACANCIES
future holds. Technological advancements will have some impact on the way we think about work. And assuming that demand continues, it will be interesting to see what levers the new government will use to attract and retain talent in the short term, be this immigration policy or qualification and skills. And so despite the buoyant mood of the new government, some tough challenges remain. increasing from just under 40% of NDR a year ago, to 43% in March this year. If revenue growth continues to slow, then we would encourage recruiters to focus on total profitability to ensure they fuller benefit from the strong growth in recruiter activity over the last 18 months. Chris Ansell is chief financial officer at Recruitment Industry Benchmarking (RIB). The RIB Index provides bespoke confidential reports on industry trends. See www. ribindex.com; info@ribindex. com: 020 8544 9807. The RIB is a strategic partner of the REC.
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The BIG talking point
n May 2011, Home Secretary Teresa May vowed to bring “common sense” back to the UK’s student visa system. That took shape in April 2012 when the government shut down the popular Tier 1 Post Study Work (PSW) visa. It offered graduates outside the European Economic Area (EEA) 12 months to pin down a skilled UK job. Now, they only have four months to negotiate an expensive and baffling points-based system in order to stay. There is evidence that culling the PSW visa route has affected the UK’s reputation abroad. Students in key territories are disappearing from our lecture theatres, while sectors depending on foreign talent face massive shortages. Has common sense prevailed, or did the government score an own goal for our economic rivals?
ATTRACTING THE BEST “There is a basic point to be made about who the most desirable immigrants are, from an economic and broader social perspective,” says the director of the National Institute of Economic Research Jonathan Portes. Like many economists, Portes sees benefits in attracting quality migration to the UK: educated Englishspeakers, immersed in our way of life and a will to work. “Who is likely to qualify on all of those counts?” he asks. “Students who have completed a degree here.”
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WHY POST-STUDY WORK VISAS MUST GO BACK ON THE MENU The UK is one of the most popular study destinations in the world – but is our visa system turning students away? Michael Oliver investigates The UK has no problem wooing foreign students – an industry worth more than £2.3bn a year to London alone. A PricewaterhouseCoopers survey found more than twothirds of foreign graduates listed the quality of UK institutions as a factor in choosing a university. We are second only to the US in popularity, with more than 300,000 students outside the EEA applying to study in 2013-14, a 3% rise on the year before. That increase has roots out East, with student numbers from China, Malaysia and Hong Kong rising by five, 11 and 13% respectively. But pluck China and Hong Kong students from the
mix, and the story changes. Student numbers actually dipped by 4.5% last year. The single biggest fall came from India, where numbers have plummeted 48% since 2009. The same survey also found nearly a third of foreign students wanted to work here post-graduation, but found the UK’s immigration system “negatively affected their experience of studying here”. The general secretary of the London School of Economics Student Union Nona Buckley-Irvine thinks the UK doesn’t endear itself to foreign students, particularly those from Asia. “There’s a perception and a reality that we are hostile to foreigners, especially students. They’re not doing
anything wrong – they want to be educated and they want to work,” she says. The change in student flow is affecting the market, particularly the UK’s tech sector. A report by the European Commission says the UK has the largest tech skill shortage in the European Union, and the loss of the PSW visa has exacerbated that. It’s predicted a shortage of 120,000 highly-skilled tech workers will hit the UK by 2020. The industry’s trade body Tech UK says the gap cannot be filled with European talent alone. “We know that recruitment demands cannot be met without non-EEA recruits, and alternative visa routes are insufficient to enable
the necessary talent flow to the UK,” it told the All-Party Par Parliamentary Group on Mig Migration. F Foreign students in science, tec technology, engineering and mat mathematics (STEM) blocks are taking up study in rival ma markets like the US, Australia, Canada and France, buoyed by attractive post-study options. The outcome is bleak, Tech UK’s deputy CEO Anthony Walker says. “The closure of the PSW visa route means that the UK is effectively training our competitors to outcompete us.”
THE ALTERNATIVES Most foreign students apply to study in the UK under a Tier 4 visa. There are four options available for students after they graduate: Tier 2 (General) The Tier 2 (General) route was envisaged by the government as the primary route for skilled grads to stay in the UK. Foreign graduates must have an offer of skilled employment from a licensed employer with a minimum salary of £20.5k per annum, or the “appropriate level” for that occupation. That varies from £20.8k for journalism jobs to a staggering £33k for marketing positions. Tier 2 visas are granted for five years and 14 days, but can be extended to a maximum of six years. After then workers can apply for leave to settle, but must be earning a salary of more than £35k a year to qualify.
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THE IDEAL VISA The problem with applying for a Tier 2 visa is its complexity. Both students and employers need to run an obstacle course before even applying and only graduates in certain fields will find jobs that meet the strict salary criteria. “Creative Arts students in particular were exceptionally restricted by Tier 2 because the nature of work which is often freelance, part-time and based on portfolio working, none of which meet Tier 2 requirements,” says the National Student Union. The inflexible nature of Tier 2 and the profound drop in student numbers pushed the All-Party Parliamentary Group on Migration to call for the PSW visa’s return. In a report published in February, the group said a “new immigration route should be established that allows non-EEA students to remain in the UK for a period of 12 months following graduation… to secure skilled employment”. But a spokesperson for the Home Office told Recruitment Matters there
were no plans to bring PSW visas back. Jonathan Portes says it should return, but with some restrictions. “The previous PSW visa was probably too generous and there was some abuse of it, but it was also in many ways quite successful. It should be restricted to people graduating from a university, but not a particular subject area.” He says it’s up to businesses to make the case. “The most serious economic challenge facing the UK is productivity, and nothing is worse for the economy than reducing the quality of workers available. You won’t have any problems convincing civil servants, but they need to have their hands strengthened.” LSE Student Union’s Nona Buckley-Irvine agrees. “We have to think about what we want our education offer to the world to be,” she says. “Being divisive hasn’t worked, there has to be a change.” Only then will common sense prevail.
“BEING DIVISIVE HASN’T WORKED, THERE HAS TO BE A CHANGE” LSE STUDENT UNION’S NONA BUCKLEY-IRVINE
Right now, graduates have four months following the end of their studies to be offered a job and go through the sponsorship process. The government imagined this would take up much of the slack from the PSW visa’s demise, but that hasn’t rung true. The Home Office anticipated a 49% drop in the number of students remaining in the UK, with the remaining 51% likely to qualify under Tier 2. But only 4,175 foreign graduates managed to find sponsored jobs in 2013, a fall of 88%. Tier 1 (Graduate Entrepreneur) visa The Tier 1 visa is for graduates and postdoctoral researchers with “genuine and credible business ideas and entrepreneurial skills”. Successful applicants can stay in the UK for up to a year to develop their business with an authorised higher education institution. Tier 4 Doctorate Extension Scheme (DSE) The Tier 4 DSE allows students nearing the end of their PhD studies to apply to stay in the UK for a further 12 months to gain work experience. Tier 5 (Temporary Worker – Government Authorised Exchange) Tier 5 visas allow nationals of some non-European nations to work in the UK for either 12 or 24 months. It’s open to Tier 4 holders but there is no option for transferring to a Tier 2 visa.
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DEDUCTIONS FROM PAY Now that the general election has concluded, recruitment businesses will be looking at what impact any changes to the law will have on their business and the industry. In this article, we focus on three key issues. By Ryan Huggett, Legal Adviser
Agency Workers and Strike Action The Conservative manifesto provided plans to repeal Regulation 7 of the Conduct of Employment Agencies and Employment Businesses Regulations 2003. Regulation 7 restricts employment businesses from providing work-seekers to cover staff taking part in industrial action, unless the strike or industrial action is unofficial. For many employment businesses, repealing Regulation 7 will create new business opportunities, as they will now be able to supply workers in strike situations where they would have otherwise been prohibited. However, there may well be reputational issues in using agency workers to break a strike.
Zero-Hours Contracts As published in the recent REC Legal Bulletin
article ‘Zero Hours Contracts – What’s Next?’ The Small Business, Enterprise and Employment Act 2015 (‘the Act’) recently passed into law, providing a general restriction on the use of exclusivity clauses in zero-hours contracts and rendering unenforceable any clauses that prevent a worker from working elsewhere or requiring them to obtain consent to work elsewhere. The previous government also produced the draft Zero Hours (Exclusivity Terms) Regulations 2015, which sought to extend this restriction to other types of contracts, as well as ensuring that workers are not subjected to any detriment for refusing work offered to them. However, while workers may welcome these changes, these provisions will not come into force until a commencement order is in
place and it remains to be seen as to how far the new Conservative government will go to implement these changes.
Europe Since the UK became a member of the European Union, EU law has been instrumental in shaping the landscape of our employment law. The Conservatives already plan to renegotiate a return of powers from the EU to the UK on key areas such as social policy and employment law, and to hold a referendum on EU membership. If the government does renegotiate a return of
powers, this will no doubt have an impact as to how employment law will develop, as Parliament will have more scope to legislate in areas that were previously shared with the EU. If, at a referendum, the public vote to leave the EU there would be significant constitutional and legal ramifications. It remains to be seen how existing employment law would be affected. The free movement of workers is another issue to consider. Membership of the EU currently allows citizens from the European Economic Area (EEA), as well as citizens from a number of other European states that are not EU members, to move freely without restriction. Leaving the EU may result in new rules relating to right to work checks and immigration, unless the UK was part of the larger EEA.
BUSINESS DEVELOPMENT: EXEC-APPOINTMENTS Figures released by Twitter show that as many as 78% of senior executives are using Twitter for business purposes. To recognise that rise in executive use of Twitter, exec-appointments.com is now offering their clients the chance to run Promoted
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Tweet campaigns as part of the Essentials Package. This will allow clients to target passive jobseekers from across the Twitter universe. Promoted Tweet campaigns will be targeted and bespoke for the role and will be managed in house by the exec-appointments.com team. The Essentials Package is
our most popular recruiting solution. It reaches both a passive and active audience by combining the most effective job board and social media inventory with
a shortlist of CVs from our candidate database and a listing on the home page of FT.com. REC members receive a 15% discount off ratecard.
For more information If you would like to hear more about the Essentials Package and how exec-appointments.com can help you fill your senior executive role please call an Account Manager on +44 (0)20 7873 4909 or email email@example.com
BEHIND THE SCENES AT THE INSTITUTE OF RECRUITMENT PROFESSIONALS
Tom Rankin iss a specialist uiter database recruiter ing at Understanding Recruitment, and winner of Bestt Newcomer at the 2014 IRP Awards
gle is an Yvonne Skingle ector at associate director tment Penna Recruitment and winner off Best arch Executive Search Consultant att the 2014 IRP Awards
THINGS I KNOW
How has your career changed since your win? I started as an apprentice recruiter, finishing my course early, got promoted a few times internally and topped it off by winning the award. It’s been fantastic.
Hard work does get recognised I work in the public sector, which is going through reform right now. I find myself working with a lot of chief executives who are planning how their teams will be structured. It’s a lot of work, but the feedback has been really positive.
How did you get into recruitment? I came out of college at 18 and didn’t fancy university. I joined as an apprentice on apprentice wages and saw the potential to grow. I really bought into recruitment and fell in love with the industry. What are the biggest shifts in your sector right now? A lot of charities I work with are going through a transformation process with the way they use databases. Charities are now opening themselves up to new data possibilities, using it to boost funding and revenue techniques. Were you surprised to win Best Newcomer? I was up against six or seven people and went into it with a mind-set that I wasn’t going to win. I was completely nervous but when it was announced it was an excellent feeling. Funny story at the time – I had a broken leg and I had to hobble up on stage to collect my award. What would you say to someone thinking about nominating themselves this year? It’s definitely worth doing; you’re always in for a shot if you’ve had a good year. It’s always good to differentiate yourself from the rest of the industry. What advice would you give yourself on your first day? Strap yourself in for the ride. You’ve got your highs and lows – enjoy the highs and don’t let the bottoms get you down.
Winning was a surprise I was quite surprised at the kind things people had said, and I feel appreciated and respected in the profession for what I do. It was a bit of a validation for me and for the industry – we really do things that add value to the client. The award made me realise that I have a client base that really appreciates what I do and the way in which I do it. The kudos matters Winning an IRP Award is a win for both you and your clients. It means you’re recognised in the industry, which has got to be good for anyone’s career. But when I saw the testimonials from my clients, I was humbled. Public sector recruitment is in a state of flux Clearly austerity and the way in which the public sector responds to cutbacks will be a big issue. I look at how organisations are modelled in terms of their service delivery for the future. It may mean more people will be working in the commercial sector or with police, fire and health in a way they haven’t before. Some senior managers we’re appointing have to be more focused on outcomes and commerciality. It’s a very interesting dynamic. Find your passion and run with it I’m passionate about what I do, and for me it’s about getting the top talent in local government in housing in particular and being able to see the impact of that on local communities. That’s what I love about what I do.
To keep up to date with everything the Institute of Recruitment Professionals is doing, please visit www.rec-irp.uk.com
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Events and training
IRP AWARDS Entries have opened for this year’s IRP Awards, but what’s the best way to build a great submission? Jodene Adjei-Agyekum explains how you can turn a winning year into a winning entry
BUILDING A WINNING IRP AWARDS SUBMISSION production, as it sets the tone of the final product, so make sure the INTRODUCTION to your business and BACKGROUND are perfect. Be specific and concise.
Awards. Submitting an entry is no mean feat, but we have the best building material to help you write an award-winning submission. The Entry – scary, right? As you sit in front of your screen, fingers hovering over the keyboard, you’re slightly put off with the thought of writing a three-page submission. Fear not, my recruitment professional! We are going to build a house instead. Project: Future 1. Planning Preparation – Make sure you get all of the materials together first to make a rough frame. Prepare your evidence so you can complete it in a timely manner. 2. A solid foundation – A good base is the first step in any
Inspection! Check your submission 3. Don’t forget the stairs – To link it all together, you’ll need examples explaining the CONTENT and EASE OF USE to the customer of your product/campaign/individual/ team or service. 4. Install the interior and flooring – Adding in bullets on EFFECTIVENESS, twoparts DEVELOPMENT or IMPROVEMENT ie. before and after. 5. Finish all the trimmings – Add WHY YOU THINK YOU SHOULD WIN, and even though your answer could be ‘‘because we are great’’, you should take this chance to polish your case. 6. Get creative with the interior – Add the finishing touches with SUPPORTING DOCUMENTS, APPENDICES and a TRIPLE PROOFREAD.
This will be the white picket fence! The Final Walkthrough – The final check of your submission Interior suggestions 7. Don’t rush, and remember who your audience is 8. Back up your points with stats and facts 9. Be clear about your achievements, avoid jargon and stick to the word count 10. Proofread again and again and again! The IRP Awards are now open! The annual award evening will take place at the exquisite Park Plaza Westminster Bridge Hotel, London on 9 December 2015. For more information please visit WWW. REC-AWARDS.COM The submission deadline is 1 September, so make sure your planning preparation begins soon. But remember, YOU have to be in it to win it! PS. If you have any questions you can send us a Tweet to @IRPAWARDS.
THE REC’S MANIFESTO FOR JOBS How do we build the best jobs market in the world? The REC will be taking forward a bold vision for the new government: How to build the best jobs market in the world. Our core message is that building the best jobs market in the world means focusing on four keys areas: 1. Give everyone the chance to succeed through work. 2. Accelerate business growth and job creation through skills. 3. Build the best local jobs market through partnerships and SME access. 4. Enhance our position in the global marketplace. As well as laying down practical solutions to some of the major labour market challenges of the day, our manifesto also showcases the positive role that recruiters play by placing over 630,000 people into new, permanent jobs last year and supporting the 1.15 million people on a temporary or contract assignment on any given day. For more information download a copy of the manifesto visit WWW.REC. UK.COM/MANIFESTO
Membership Department: Membership: 020 7009 2100, Customer Services: 020 7009 2100 Publishers: Redactive Publishing Ltd, 17 Britton Street, London EC1M 5TP. Tel: 020 7880 6200. www.redactive.co.uk Editorial: Editor Michael Oliver firstname.lastname@example.org. Production Editor: Vanessa Townsend Production: Production Executive: Rachel Young email@example.com Tel: 020 7880 6209 Printing: Printed by Precision Colour Printing
The official magazine of The Recruitment & Employment Confederation Dorset House, 1st Floor, 27-45 Stamford Street, London SE1 9NT Tel: 020 7009 2100 www.rec.uk.com
© 2015 Recruitment Matters. Although every effort is made to ensure accuracy, neither REC, Redactive Publishing Ltd nor the authors can accept liability for errors or omissions. Views expressed in the magazine are not necessarily those of the REC or Redactive Publishing Ltd. No responsibility can be accepted for unsolicited manuscripts or transparencies. No reproduction in whole or part without written permission.
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