With news that more than a fifth of UK employers plan to make redundancies over the next quarter, the UK’s leading recruitment agencies are in for a torrid couple of months. Irrespective of whether or whenever the economy emerges from lockdown, hiring is unlikely to feature in many companies’ plans for the foreseeable future.
Companies are already freezing pay, slashing new roles and making extensive use of the government’s furlough scheme. This further backs Plimsoll’s own recent research whereby business owners told us they are reviewing their human resources like never before. How many people do they really need?
But where does that leave the UK’s thousands of recruitment agencies? Agencies exclusively serving the following markets are particularly vulnerable to the current freeze in hiring:
Aviation – The airline market is in the middle of the worst crisis on record. Average profits of agencies serving this market were already below 1% meaning they have little in reserve.
Oil & Gas – The double whammy of COVID-19 and a collapse in oil prices has battered this low margin sector. For many agencies the current market conditions are an existential crisis.
Teaching / Education – With most staff working remotely or on a rotational basis, hiring is off the cards for now. How many providers will survive until September in such a low margin market?
Hospitality – The hospitality sector will be in total lockdown until July and even then, what form will the market come back in? Agencies serving this market were only making 1.4% margins pre-crisis.
Of course, there will be winners and losers in all scenarios and certainly the pain across the recruitment sector is not being shared evenly. In fact, many agencies are now considered “key services” as they provide staff to strategic industries including:
Drivers – Qualified driving staff are in such short supply meaning that vacancies are filling at unprecedented levels. A welcome boost with average margins for agencies consistently under 1%
Healthcare – Clearly the most in demand area of the HR ecosystem. Traditionally one of the more profitable sectors, serving the healthcare market has been boosted significantly by sharp demand.
GP Locums – Another branch of the healthcare market but one that has seen a surge in demand. Always a low margin niche to serve but whereby vacancies are far outstripping applicants.
The next period in the recovery of the UK economy could drag some of the struggling sectors out of the doldrums and those that have experienced an unforeseen boost from COVID-19 could suffer a serious hangover. Certainly, those agencies that are serving public sector and “key worker” areas of the economy are likely to be shielded from the worst.
Plimsoll’s unique method of analysing individual companies and comparing them to every other company in their respective markets will answer all the key economic questions of the day. Which of your rivals went into the pandemic crisis already in danger, who has the capacity to ride it out and who will become another casualty? Regardless of the market you operate in, serve or rely on, Plimsoll can help you assess and identify all three types of companies to ensure your decision making is based on the best intelligence possible.