The majority of recruitment firms are expecting a 15-30% drop in their income this year as a result of a weakened jobs market due to the pandemic.
Four in five recruitment firms expect their full-year income for 2020-21 to reduce, according to a survey by HSBC Professional Services, with many cutting costs and taking up financial support from the government in order to stay afloat.
Impact of Covid-19 on recruitment
Eighty-five per cent of firms are using the government’s income tax and VAT deferment schemes and 40% have secured one of the government’s coronavirus loans. Others had cut costs around staff and remuneration.
However, the need to reduce costs further is still an issue, with almost half of recruitment firms planning to make furloughed staff redundant.
“November and March and the furlough scheme coming to an end will be pinch points not just for recruitment but for the entire economy and it will be interesting to see how resilient those companies remain when they have to start bringing back workers and fronting that full cost themselves,” Chloe Clift, HSBC UK’s head of professional services told City AM.
“Some clients we have been speaking to have gone through a huge amount of change and used it as an opportunity to review underperforming people within their organisation.”
According to the latest Jobs Recovery Tracker from the Recruitment and Employment Confederation, the number of jobs being posted is gradually increasing after vacancies plummeted during the lockdown period.
In the week of 3-9 August there were 1.10 million active job postings in the UK, up from 1.04 million in the previous week. Some 126,000 new job postings were made in the first week of August – the highest since the crisis began.
HSBC said that there are some green shoots starting to reappear in the recruitment market, as businesses consider how they can ramp up their services to meet increasing demand as the economy reopens.
Clift said: “[Recruitment firms] are now looking forward and saying who do we need to hire? How can we ramp up to meet demand? It looks like clients are starting to look forward and look at growth opportunities.”