UK job agencies see worsening conditions, cut staff

By Matt Scuffham

LONDON (Reuters) - The country's two biggest employment agencies, Hays and Michael Page, warned of deteriorating market conditions on Thursday, sending their shares lower, and said they had cut hundreds of their own staff in response to the slowdown.

Hays, which is Britain's largest employment agency, said revenue fell 10 percent on a comparable basis in its second quarter, the three months ended December 31, as conditions worsened in most of the 27 countries in which it operates.

Hays said it had cut just over 500 jobs globally to save costs, with about 350 of the losses coming in the UK.

Michael Page, which specialises in placing professional staff and last year rejected a bid approach from Swiss rival Adecco (ADEN.VX), said gross profit fell by 7.3 percent in the last three months, its fourth quarter, with market conditions becoming "noticeably more difficult".

The group, which operates in 28 countries, said it had reduced its headcount by over 500 during the quarter as part of a range of measures to reduce its cost base.

A survey published Wednesday by the Recruitment and Employment Confederation REC.L and KPMG showed the number of Britons finding work and demand for staff fell in December at the sharpest rate since at least 1997.

REC/KPMG said its December data suggested a three-month rise of 170,000 in the number of people out of work which, if confirmed, would mean unemployment is likely to have topped 2 million at the end of 2008.

On Wednesday Dieter Scheiff, chief executive of Adecco, the world's largest staffing company, said the group expected sales to fall in 2009 and was preparing itself for two "very challenging years".