Recruiters reap benefit of UK staff shortage crisis

Rapidly rising wages caused by a war for talented staff has sparked an unexpected boom for British recruiters tasked with finding workers for companies across the UK.

This week, full-year results from UK-listed recruiters PageGroup, Robert Walters and Hays provided details of the scale of the challenge facing bosses, as they fight to keep their own staff and poach others from rivals with ever higher wage offers.

Robert Walters and Hays said profits for their financial years would beat market expectations, with net fee income growing by about a third in the last quarter for both companies. Page raised its earnings guidance after quarterly gross profit grew by 55 per cent, compared with the same quarter in 2020.

This would mean a record quarter and year for the group, according to Page’s chief executive, Steve Ingham. Gross profit rose nearly 75 per cent in the UK, where Ingham said December was the biggest month of the year for the group despite rising cases of Omicron.

Analysts at HSBC said this sort of hot labour market had not existed since the global financial crisis of 2008.

“The labour market seems to be seeing a great churn, people are changing jobs and seem to be able to achieve reasonable pay rises,” the bank said.

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Staff shortages and job moves have been caused by a number of factors, from longer-term issues with the lack of skills training for roles in technology to the short-term effects of the pandemic, which has caused many people to rethink their careers or seek out employers with more flexible working options.

Easing restrictions mean that people have once again been able to meet potential new employers, according to bosses, while remote working has severed traditional bonds with workplaces. “It now matters less who signs your cheque at the end of the day,” said one audit chief.

As a result, the recruitment industry has rarely seen such demand, from the lower-wage divisions of hospitality and healthcare to white-collar sectors such as law and accounting, which have been boosted by the dealmaking frenzy. And when companies were prepared to raise wages, recruiters were able to increase rates, Ingham said.

It marks a sharp recovery for recruitment companies after demand for staff flatlined during the worst of the pandemic in 2020, forcing groups such as Page to cut costs and freeze their own hiring plans.

Now, the biggest problem for UK jobs agencies is finding enough new staff to meet rising demand among clients, with recruiters topping the list of the most sought after roles.

Ingham said there was no sign that strong demand for recruitment services would slow, as companies continued to report widespread vacancies.

The number of job vacancies between September and November 2021 rose to a record 1.22m, according to the ONS last month, an increase of 434,500 from pre-Covid levels in the first quarter of 2020.

The high demand meant wages were increasing as “clients desperately tried to keep hold of who they have”, said Ingham, while candidates often had multiple offers on the table.

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Robert Walters’s finance director, Alan Bannatyne, said workers were being offered wage increases of up to a quarter to move jobs, pointing to particularly strong demand among white-collar roles in law and finance.

But within this, he added, there were people who could almost double their salary in the right positions.

Ingham said Page had seen similar wage increases in the technology and digital sectors, reflecting the work by companies during the pandemic to transform their operations.

The market has been led by demand for permanent staff, according to recruiters, although Ingham predicted that temporary jobs would catch up as employers sought greater flexibility within their workforce.

While a boon for the headhunters, the trends are causing anxiety among company bosses.

This week Pret A Manger raised wages for its staff in the UK, while Next warned about the impact of wage inflation in its results.

According to a survey by accountants RSM on Thursday, more than a third of businesses have had to delay expansion plans because of staffing shortages.

A third also said they had needed to turn business away and a similar number closed some locations completely. The Harris Poll for RSM surveyed 402 senior executives.

Nearly two-thirds of businesses in the survey found staff recruitment “extremely” or “very” challenging and more than 40 per cent had increased salaries as a result.

A survey of more than 5,400 businesses by the British Chambers of Commerce, which was also published on Thursday, found four-fifths of firms that attempted to recruit were facing difficulties with finding staff.

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