Illustration for the article entitled "Is the recruitment industry in crisis, or is it a passing trend?"
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Is the recruitment industry in crisis, or is it a passing trend?

As PageGroup announced that it is experiencing falling profits in 2024, down 12% year on year (to £224.3 million gross profit for the second quarter of this year), is the recruitment industry in jeopardy, or is it a transient job market trend?

According to PageGroup in the FT: ‘Economic uncertainty and geopolitical tensions were weighing on an already weakened global jobs market.’

And due to falling profits, PageGroup is unsurprisingly making job cuts. Their current headcount is 5,598, compared to over 7,000 in September 2022.

A trend in lower profits

But they are not alone. UK recruiters Hays and Robert Walters have also reported a decline in net fees for the three months ending in June 2024. They suggest tough hiring conditions are due to vacancies taking longer to fill, less worker movement, and economic and political uncertainties not helped by the British and French elections.

https://twitter.com/CIPD/status/1660556386781069315

Toby Fowlston, CEO at Robert Walters told Reuters: ‘Our near-term planning now assumes that any material improvement in confidence levels will be gradual, and likely not occur before 2025.’

Temp or perm roles at risk

The hiring reduction of temporary and permanent roles also tells us about the current recruitment climate.

For PageGroup in the second quarter of 2024, gross profits for permanent roles declined by 12.8%, compared to a 9.8% drop for temporary hiring. Perhaps due to nervous businesses not wanting to commit to permanent roles. Even so, the FT said: ‘The rate of decline in profits from temporary hires worsened from the first quarter too.’ AJ Bell analyst Russ Mould told the FT: ‘It will be of particular concern to the company’s shareholders, and perhaps economists and policymakers, that temporary hires are coming under further pressure. Usually, employers will focus on full-time hires if they are feeling confident and temporary ones if they have less visibility, so retrenchment in part-time posts is a potentially troubling sign.’

Recruitment in Poland

Poland, however, appears to have a more promising hiring position as unemployment remains low.

Marcin Klucznik, an advisor at the Polish Economics Institute, said: ‘Eurostat data from January 2024 show that the unemployment rate, estimated based on survey research, was 2.9 per cent, which is the second-best result in the European Union after Malta. In February 2024, it stood at 5.4 percent and still remains at a historically low level. With the economic rebound in the country, labor shortages may become a challenge again.’

However, there are still recruitment challenges. Individuals may not be actively seeking to change jobs, and the post-pandemic trend of career movement is slowing significantly. According to a 2024 salary survey conducted by Hays Poland, there is: 'A significant skills gap, with a high demand for specialised skills and a shortage of available candidates.’

In the survey, ‘47% of organisations are struggling to find suitable candidates for managerial and specialist positions, and 32% have stated that there is simply a shortage of workers in Poland.’

So, why are recruiters not swooping in, taking advantage of this skill shortage, and finding individuals to fill the jobs, potentially with those outside of Poland?

Perhaps it depends on the skill set and level of those seeking work. Hays found that although there have been few layoffs in Poland in the last twelve months, those who have lost their jobs have quickly found another job, and low unemployment levels mean that vacancies are due to a skills shortage.

Recruiters also have the added challenge of less movement among workers in Poland. In their survey, Hays Poland found: ‘The majority of respondents do not plan to change jobs in 2024, but 40% are open to interesting offers. Meanwhile, 18% of professionals plan to work in another organisation.’

The impact of AI

The emergence of AI also means that fewer jobs are available due to its sheer growth, which is another blow for recruiters.

Certainly, this is the case in the United States, where, in April this year, almost 65,000 lost their jobs because of AI. The highest number of such job cuts was in technology. Forbes states that although in April, the total number of new jobs announced for the first four months of 2024 was 46,597, this is the lowest first four-month total of the year since 2016.

Furthermore, the Institute for Public Policy Research (IPPR) in the UK predicts that in the next few years, artificial intelligence could wipe out a staggering 8 million jobs in the UK.

It seems recruiters are powerless to change this, other than watching from the sidelines and hoping that AI is less successful in the long term than expected.

Quiet hiring exists

Recruitment firms also continue to face the challenge of ‘quiet hiring’ in the workplace, where managers upskill or retain existing workers to fill positions rather than seeking talent externally.

However, worker and employment trends are cyclical and just as the ‘great resignation’ came and went after the pandemic, upskilling existing workers takes commitment, time and a lot of manager investment. Hiring someone new might just be easier.

As Lizzie Crowley, senior skills policy adviser at the CIPD, said, ‘Many private firms rely on their ability to buy in talent rather than thinking about building that internally. They don’t have a strategic approach in the short term, let alone the long term.’

The future looks semi-optimistic

Ignoring reskilling and artificial intelligence momentarily, hope is on the horizon for recruiters and a more buoyant movement of job seekers. Although many companies may have had to pay extravagantly to persuade talent to move, money pots for hiring are not bottomless.

While there may be a lull in hiring and new roles available, the FT believes the future is optimistic: ‘Companies will be bedding down their recent spate of expensive hires, and soothing existing workers who may now be feeling relatively underpaid. A deep chill on job moves is bad news for potential candidates, forced to hunker down and hope for better days.

‘Yet longer term, demographics are on their side. Shrinking workforces and the need for new skills point to a long-term bull market in talent. That is helpful for the (qualified) jobseeker and the recruitment companies trying to reel them in.’

Author: Sarah Haselwood

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