Hays has highlighted hesitancy in the UK hiring market as it revealed its annual profits have dropped by 92%.
The recruitment business said employers were being cautious about taking on new staff following Labour’s general election win and said it faced “challenging market conditions”.
Its full-year results revealed that the firm, which operates in 33 countries, saw annual pre-tax profits for the year to June fall to £14.7m, down from £192m the previous a year.
In UK and Ireland (UK&I) division, profits alone plunged by 78% in the year to June as employees too showed reluctance in moving jobs in the run-up to last month’s election.
For UK&I, the report stated: “As anticipated, activity levels have been relatively subdued since the general election and conditions remain challenging.”
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According to Hays, demand for its recruiting and consultancy services had yet to recover even after Labour secured a landslide majority.
Whether the government’s work pledges have led to hiring hesitancy remains unclear, but some business groups and employment law firms have urged caution over policies concerning fire and rehire practices and zero-hour contracts.
Hays chief executive Dirk Hahn said: “We saw increasingly challenging market conditions through FY24 in both perm and temp, with low confidence levels and longer-than-normal time-to-hire which significantly impacted our profitability.
“However, the actions we are taking are better positioning Hays to benefit when markets recover, and when they do, we can return to, and then exceed, prior peak profits.”
Hahn explained that the company had reduced costs by an annualised £60 million, half of which are structural savings, but also included reducing group headcount by 15%. The firm also “restructured our operations, while accelerating efficiency programmes”.
He added: “We have a strong financial position, and great teams of talented colleagues worldwide, whom I thank wholeheartedly for the deep commitment they show every day. Our key markets are also being driven by powerful, supportive megatrends and remain characterised by significant talent shortages, which we help solve for our clients. Our actions are better positioning Hays to benefit when markets recover, and when they do, we can return to, and then exceed, prior peak profits.”
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