Rapidly rising wages caused by a war for talented staff have sparked an unexpected boom for British recruiters tasked with finding workers for companies across the UK.
This week’s annual results from British 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 higher salary offers.
Robert Walters and Hays said their fiscal profits will beat market expectations, with net commission income rising by around a third in the latest quarter for both companies. Page raised its profit forecast after quarterly gross profit rose 55%, compared to the same quarter in 2020.
It would mean a banner quarter and year for the group, according to Page chief executive Steve Ingham. Gross profit rose nearly 75% in the UK, where Ingham said December was the most important month of the year for the group despite rising Omicron cases.
HSBC analysts said this type of boiling labor market hasn’t existed since the global financial crisis of 2008.
“The job market appears to be experiencing high turnover, people are changing jobs and seem to be able to get reasonable salary increases,” the bank said.
Staffing shortages and job changes have been caused by a number of factors, from longer-term issues with the lack of professional training for roles in technology to the short-term effects of the pandemic, which has pushed many people to rethink their careers or seek out employers with more flexible work options.
The easing of restrictions means people have again been able to meet potential new employers, bosses say, while remote working has severed traditional ties to workplaces. “It now matters less who signs your check at the end of the day,” said an audit manager.
As a result, the recruiting industry has rarely seen such demand, from the low-wage divisions of hospitality and healthcare to white-collar sectors such as law and accounting, which have been boosted by the deal frenzy. And when companies were ready to raise salaries, recruiters were able to raise rates, Ingham said.
It marks a strong recovery for staffing firms after demand for staff stagnated at the worst of the pandemic in 2020, forcing groups such as Page to cut costs and freeze their own hiring plans.
The biggest problem for UK employment agencies today is finding enough new staff to meet growing customer demand, with recruiters topping the list of most in-demand jobs.
Ingham said there were no signs of the strong demand for recruitment services abating as companies continued to report large-scale vacancies.
The number of vacancies between September and November 2021 hit a record 1.22million, according to the ONS last month, an increase of 434,500 on pre-Covid levels in the first quarter of 2020.
High demand meant wages rose as “clients desperately tried to keep hold of who they had,” Ingham said, while applicants often had multiple offers on the table.
Robert Walters chief financial officer Alan Bannatyne said workers were being offered pay rises of up to a quarter to change jobs, pointing to particularly strong demand among white-collar workers in law and finance.
But within that framework, he added, there were people who could almost double their salaries in the right positions.
Ingham said Page has seen similar pay increases in the tech and digital sectors, reflecting the work companies have done during the pandemic to transform their operations.
The market was 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.
Although a boon for headhunters, trends worry business leaders.
This week Pret A Manger raised the wages of its UK staff, while Next warned of the impact of wage inflation on its bottom line.
According to a survey by RSM accountants on Thursday, more than a third of companies had to delay their expansion plans due to a lack of staff.
A third also said they had to refuse business and a similar number closed some sites altogether. The Harris Poll for RSM surveyed 402 senior executives.
Nearly two-thirds of companies surveyed found recruiting staff “extremely” or “very” difficult and more than 40% raised their salaries as a result.
A survey of more than 5,400 businesses by the British Chambers of Commerce, also released on Thursday, found that four-fifths of companies trying to recruit were having difficulty finding staff.