Hays Recruitment Reports Significant Profit Decline Amid Economic Challenges
The recruitment firm's operating profits fell dramatically as hiring slows across the UK and Europe, prompting substantial cost-cutting measures.
Hays, one of the leading recruitment agencies in Europe, reported a significant decline in operating profits for the latter part of last year, with figures dropping by 56% to £26 million compared to the same period in 2023. The London-based firm attributed this downturn to considerable headwinds stemming from prevailing economic conditions affecting client and candidate confidence.
Over the past year, Hays made strategic adjustments by closing 15 offices across the UK and Ireland and reducing its workforce by over 1,100 consultants, with around 300 positions specifically affected in these regions.
The company’s total headcount has decreased by approximately 2,700 over the last two years, bringing the total to about 6,800 by the end of 2024.
The recruitment firm's operations are primarily concentrated in markets heavily reliant on office-based jobs, particularly in the UK, Germany, and France.
However, a rise in political and economic uncertainty across Western Europe has led to a notable decline in hiring activity.
Hays indicated that fees earned from hiring, which are charged to clients, dropped by 13% over the six months concluding on December 31, relative to the previous year.
In the UK and Ireland specifically, the firm reported a 17% decrease in these fees.
Chief executive Dirk Hahn highlighted the challenges posed by the current economic climate, stating, "Our key markets are being driven by powerful, supportive megatrends and remain characterised by significant talent shortages, which we help solve for our clients." Hays has implemented cost reductions amounting to approximately £25 million annually in response to the changing market conditions.
This financial downturn comes at a time when several major corporations in the UK have expressed concerns regarding governmental policies that involve raising taxes on businesses.
Specifically, the Labour government announced an increase in employer national insurance contributions in its recent budget, aimed at generating more tax revenue for public services such as the National Health Service (NHS).
However, this policy has faced criticism from companies, which argue that it raises hiring costs.
Market analysts have noted that low confidence levels and political uncertainty likely contributed to the declines observed in Hays’ financial performance.
The ongoing economic turbulence has compelled recruitment firms to navigate the challenges with increased caution, and larger entities like Hays have enacted significant cost-cutting measures to maintain stability during this tumultuous period.
Over the past year, Hays made strategic adjustments by closing 15 offices across the UK and Ireland and reducing its workforce by over 1,100 consultants, with around 300 positions specifically affected in these regions.
The company’s total headcount has decreased by approximately 2,700 over the last two years, bringing the total to about 6,800 by the end of 2024.
The recruitment firm's operations are primarily concentrated in markets heavily reliant on office-based jobs, particularly in the UK, Germany, and France.
However, a rise in political and economic uncertainty across Western Europe has led to a notable decline in hiring activity.
Hays indicated that fees earned from hiring, which are charged to clients, dropped by 13% over the six months concluding on December 31, relative to the previous year.
In the UK and Ireland specifically, the firm reported a 17% decrease in these fees.
Chief executive Dirk Hahn highlighted the challenges posed by the current economic climate, stating, "Our key markets are being driven by powerful, supportive megatrends and remain characterised by significant talent shortages, which we help solve for our clients." Hays has implemented cost reductions amounting to approximately £25 million annually in response to the changing market conditions.
This financial downturn comes at a time when several major corporations in the UK have expressed concerns regarding governmental policies that involve raising taxes on businesses.
Specifically, the Labour government announced an increase in employer national insurance contributions in its recent budget, aimed at generating more tax revenue for public services such as the National Health Service (NHS).
However, this policy has faced criticism from companies, which argue that it raises hiring costs.
Market analysts have noted that low confidence levels and political uncertainty likely contributed to the declines observed in Hays’ financial performance.
The ongoing economic turbulence has compelled recruitment firms to navigate the challenges with increased caution, and larger entities like Hays have enacted significant cost-cutting measures to maintain stability during this tumultuous period.
