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Services Industries Expect More Prosperity in 2000

Tight Job

Market Presents Hiring,

Retention Challenges

Expect few changes for the service and professional industries in 2000, predicted industry leaders in the 10th Annual Deloitte & Touche/San Diego Business Journal Economic Outlook Survey.

Seventy-one people in the services industries responded to the poll. When comparing the service industry’s economic condition in 2000 with 1999, 52 percent, or 37 respondents, said it would be about the same, and 37 percent, or 26 respondents, said that it would be better.

The survey also revealed 65 percent of the respondents expected the economy in 2000 to be the same as 1999. Twenty-two respondents said it would be better. One respondent said it would be worse.

Service industries will prosper as long as the economy is strong, said Richard Meyerson, president of local travel agency Traveltrust.

In agreement was Deanna Strickland, area manager for employment agency Pro Staff in La Jolla.

“It was a great year for us, considering that the economy is booming and San Diego County is really growing with all the new companies moving in,” Strickland said. “Of course, it’s very challenging to do what we do in this tight job market.”

Employee Retention

With the county’s current unemployment rate of 2.7 percent, finding and retaining employees is a growing concern of management in the services industries.

According to the poll, 65 percent of those surveyed experienced some difficulty in recruiting qualified employees in ’99. Twenty-one percent experienced extreme difficulty. Fourteen percent didn’t find it difficult at all.

At Pro Staff, Strickland and her team continue to find people by attending job fairs, networking and word of mouth from current employees, she said.

Strickland has a positive forecast for 2000. One trend: “I see a lot of companies looking to use agencies more for permanent replacement, just because it’s so difficult to recruit.”

Business Statewide

Two respondents to the Deloitte/Business Journal poll expressed disappointment in the state’s passage of Assembly Bill 60, which requires employers to provide overtime pay after an eight-hour workday rather than a 40-hour workweek.

“It will make doing business in California and San Diego very difficult,” a respondent commented on the bill. “It’s a very ill-conceived piece of legislation. Should some sort of workers’ compensation and/or minimum wage changes take place, it will be very detrimental.”

Strickland also has seen employers grappling with the new law.

“It’s definitely changing the way a lot of our clients do business,” she said. “A lot of our clients, especially the ones in production and manufacturing, prefer to have a four-day workweek with 10 (working) hours a day.” Many have revised their schedules to five eight-hour days, Strickland said.

However, 85 percent, or 60 respondents, said California is still a good place to do business. Fifteen percent, or 11 respondents, said it’s not.

Of those polled, 60 respondents expected an increase in their net income. Five respondents expected a decrease in net income. An additional five respondents didn’t expect any change.

When asked about changes in their companies’ average employee compensation in 2000 compared with 1999, 97 percent of those surveyed expected it to increase. Two respondents didn’t expect any increase at all.

Among the bigger trends this year has been the influx of travel agencies adding a service charge to their ticket sales, Meyerson noted.

It was prompted by major air carriers further reducing the commissions agents receive when selling airline tickets. Meyerson expects more cuts to come, he said.

Beyond profit margins, keeping and retaining employees in the current job market will continue to be important, Meyerson said.

“As an employer, I personally have to watch very carefully to make sure that my employees are happy,” he said. “I don’t want them looking elsewhere. We have to pay them well, and we have to treat them well, and we have to do special things for them and make them feel that they’re part of a family.

“I think that’s going to be an important focus, certainly during the beginning of this millennium.”

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