Hays Reports Hiring Market Stagnation As Fee Income Continues To Decline

The hiring market remains firmly in the doldrums, but there may be cause for cautious optimism according to the latest trading update from Hays, the UKs largest listed recruitment firm. The company reported that while market conditions are still challenging, there has been no further deterioration over the summer months, a development that provided a modest lift to Hays share price on Friday.

Hays announced that its net fee income dropped by 8 percent between July and September compared to the same period last year. This matches the decline reported in the previous quarter, suggesting that the pace of contraction has stabilised. Finance chief James Hilton noted, It is still tough but maybe not quite as bad as it was. The market is not improving yet at least I feel that it is not getting worse right now.

Following a period of postpandemic boom that saw recruiters outperform previous records, the hiring slowdown has persisted for nearly three years. Hays has not recorded yearonyear growth in fee income since early 2023. Geopolitical uncertainty, high interest rates, elevated inflation and a spate of general elections worldwide have all contributed to the current malaise, prompting companies to delay hiring plans while employees hesitate to switch jobs amid job security concerns.

Hilton explained that businesses are exercising extreme caution with replacement hiring, with most firms not expanding headcount and many looking instead at what efficiencies and automation can be achieved through artificial intelligence. He described the trend as global, with fee income falling across all major territories including the US, Europe and Australia. The French division in particular has struggled under persistent political turbulence.

Where recruitment is happening, fixedterm contracts are favoured, a pattern that Hays confirmed continued through the summer. The company saw its contracting business drop by 5 percent while permanent roles fell by 13 percent yearon year. In response, Hays has enacted significant cost reductions reducing the workforce from a peak of around 13400 to roughly 9200 staff and trimming monthly costs from 87 million pounds to 74 million pounds. Hilton expects further savings though headcount is set to remain stable this quarter.

Despite the revenue shortfalls, these cost measures enabled operating profit to stay broadly stable during the period. Hays anticipates that the tough market conditions will persist in the near term, with consistency and certainty now crucial for businesses to regain confidence in their hiring decisions. As Hilton stated, It is when the goalposts move unexpectedly that businesses find it difficult to make the right choices.