Industry Spotlight: Recruitment
The recruitment sector provided a direct contribution of £42.3 billion to the UK economy in 2019, according to a report published by the Recruitment & Employment Confederation (REC) in December 2020. This represented an 8% increase on the contribution in 2018, with over a million people placed in permanent roles and just under a million in temporary placements at the beginning of the pandemic.
The industry was massively affected by the Covid-19 pandemic, both positively and negatively. Recruitment firms were called upon to source staff for supermarkets, care services, parcel couriers, lorry drivers and hospitality. Top hiring firms include the NHS, Care UK, Hermes, Amazon and Lidl.
In July 2021, the British Chamber of Commerce published its Quarterly Recruitment Outlook survey for Q2 2021, which analysed responses from 5,700 firms. 70% of firms surveyed reported recruitment difficulties, an increase from 63% in Q1. The sectors reporting difficulties include construction, hotels, catering, production and manufacturing.
One factor that has caused such recruitment issues is the loss of foreign workers from the UK. The Office for National Statistics reported in September 2021 that more than 200,000 EU citizens left the UK in 2020, due to the economic impacts of Brexit and the pandemic. According to Indeed Jobs, searches by EU-based jobseekers for UK work were down 36% in May 2021, compared to average levels in 2019. Other Non-UK workers that have left are estimated to be in excess of one million. This has left a staggering gap in the UK work force.
The problems presented have also made a change to how recruitment is done in the UK. The actual process of how recruitment agencies handle enquiries and process workers has had to shift to a virtual process, due to government lockdowns and social distancing requirements, to include video interviews and online onboarding. The necessity of efficient staff placements has streamlined the process and led to more dynamic hiring. The workplace is changing, with remote working now increasingly popular and allows the sourcing of staff nationally and even internationally. Reports suggest it is now a common requirement of candidates seeking roles that some form of remote or flexible working is available as part of the job offering.
The assets that a recruitment company may own are included but not limited to: computer equipment, office furniture, contracts, branding, websites and social media accounts, customer databases, work in progress and goodwill.
We have dealt with a couple of recruitment companies this year, but both specialised in staff for the hospitality industry so it’s understandable that they struggled during the pandemic. Based on the current demand for staff and how dynamically the industry has responded to the challenges brought about by Covid-19, we are not expecting recruitment company insolvencies to form a trend in 2022. However, there may still be firms that have issues with bounce back loans, CBILS and deferred VAT that seek advice. Competition can also be a big issue in areas oversaturated with similar firms.
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