Recruiter slump points to jobs market stasis, not crash

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Do you like your colleagues? Or is there perhaps someone who sets your teeth on edge? If so, you are in for a tough spell. The chances of anyone in your immediate vicinity changing jobs have plummeted.

That, at least, is what recent trading at Hays, PageGroup and Robert Walters suggest. The UK and US look particularly weak. PageGroup’s UK fee income fell by a fifth; in the US, it was down almost a quarter. Hays reported a similar trend, worsening into December. The slowdown has affected the market for permanent jobs, more than that for temps.

Such gloomy results look hard to square with a resilient jobs market. UK unemployment was 4.2 per cent in the second and third quarters. US December employment data was surprisingly strong.

Yet recruiters only spend a sliver of their time filling newly created jobs. The bread and butter is so-called job churn, the merry-go-round created by companies and candidates seeking that elusive perfect match. There was a lot of that post-Covid, as people reconsidered their life goals. It has now come to a screeching halt.

Companies are posting fewer job offers, as confirmed by the Recruitment and Employment Confederations’ labour market tracker.

Roles that do come up take ages to fill. Anecdotally, employers are only offering 5 to 10 per cent more than a candidate’s current salary, down from as high as 20 to 30 in 2022. Smaller rises make candidates more reluctant to take the leap, and counter-offers from their current employer are more likely to succeed.

The slowdown appears to be particularly acute in highly paid non-technical jobs, such as senior employees in HR, legal and finance. Such people are the labour market equivalent of big ticket discretionary buys, perhaps less crucial to the day-to-day running of organisations than they might hope.

Clearly, macro headwinds have made potential employers more cautious about taking on new employees, although not yet so cautious that they are taking an axe to headcount. Some of the slowdown is cyclical, too. Companies will be bedding down their recent spate of expensive hires, and soothing existing workers who may now be feeling relatively underpaid.

A deep chill on job moves is clearly bad news for potential candidates, forced to hunker down and hope for better days. Yet longer term, demographics are on their side. Shrinking workforces and the need for new skills point to a long-term bull market in talent. That is helpful for the (qualified) jobseeker and the recruitment companies trying to reel them in.