Good news / Bad news - many large recruitment agencies are on a slide

Depending on your feelings towards recruiters this is potentially good or bad news. We all know the general view of recruiters is pretty low for many people - with almost 85% of recruiters with less than 5 years experience. The notoriously high staff turnover for the industry is the main reason most people have a bad experience. The churn and burn for the larger recruitment companies is now catching up with them and the UK recruitment landscape is currently facing significant challenges, with recent reports indicating a notable slowdown in hiring activities. In January, businesses reduced jobs and decelerated recruitment efforts in anticipation of upcoming tax increases in the autumn budget. Surveys revealed that companies are preparing for a £25 billion rise in national insurance contributions by cutting costs, scaling back recruitment, and trimming their workforce. This led to the weakest demand for new workers since the pandemic, with private sector employment at its lowest since November 2012 and business confidence falling to a two-year low.

A survey by KPMG and the Recruitment & Employment Confederation indicates a significant weakening in demand for staff, with the vacancy index dropping to 41.6 in January. This decline comes after the tax-raising Budget announced by Rachel Reeves in October, which has led to employers delaying hiring and investment plans. The index for temp billings also fell sharply, indicating a weaker than usual post-Christmas slowdown. Despite minimal job losses for current employees, hiring has slowed, and recruiters are reporting fewer vacancies across all sectors, including previously understaffed areas like hospitality and healthcare. Additionally, wage growth has weakened, suggesting employers are hesitant to offer high pay premiums to attract new hires.

In a significant development, Serco has secured a multiyear recruitment contract worth up to £1.5 billion to manage the hiring process for the UK's Armed Forces, including the Army, Royal Navy, Royal Air Force, and Strategic Command. This marks the first time that all military recruitment will be managed by a single privatized service. The contract, set to commence in 2027, aims to expedite the recruitment process, providing potential recruits with a conditional response within 10 days and a training start date within 30 days of application.

Looking ahead, industry experts suggest that while 2024 presented challenges due to economic uncertainties and cautious business behavior, the UK recruitment market is positioned for an upturn in 2025. Recruiters are advised to remain adaptable and innovative, leveraging technological advancements and focusing on strategic planning to navigate the evolving landscape.