Despite a significant increase in sales exceeding £2bn, the global recruiter experiences a doubling of losses
The UK recruitment sector is bracing for a tough year ahead, with major players like NES Fircroft, Robert Walters, Hays, and PageGroup reporting declining profits and difficult market conditions.
NES Fircroft and Hays Downgrade Profit Guidance
Hays, a global recruitment giant, has downgraded its annual profit guidance, expecting challenging market conditions to persist into 2026. The company forecasts pre-exceptional operating profits of around £45m in 2025, a significant drop from previous estimates. NES Fircroft, formed through the merger of NES Global Talent and the Fircroft Group in September 2020, also posted a pre-tax loss of $67.7m for the 12 months ending October 2024.
Declining Vacancies and Reduced Hiring Activity
UK vacancies have been falling consistently for 36 consecutive periods, with a broad decline in 14 out of 18 sectors. Permanent staff appointments have decreased at the fastest rate in nearly two years, and temporary billings have also decreased sharply, driven by business uncertainty and budget constraints.
Increasing Candidate Supply but Weaker Salary Growth
Despite more candidates in the market, pay growth has weakened, with only modest increases in starting salaries and contract wages. Candidate availability is expanding at the fastest pace since late 2020 due to redundancies and reduced appetite for work, leading to more competition for roles.
Shifts in Hiring Models and Contract Working Culture
Businesses are favouring project-based hiring, particularly in sectors like tech, where rapid onboarding for digital transformation projects is required. Contract roles offer flexibility and quick access to specialist skills without long-term costs. IR35 tax compliance continues to shape contract recruitment, with high demand for roles outside IR35 due to contractors’ preference for autonomy and tax benefits.
Sector-specific Insights and Profitability Trends
Despite overall caution, certain sectors remain profitable for recruiters, notably hospitality and education. Hospitality benefits from ongoing events and tourism driving demand for temporary roles, often at higher margins due to short-notice bookings. Education recruitment remains steady, with ongoing needs for supply teachers and support roles, and schools favouring trusted suppliers for repeat business.
Impact on Different Labour Market Segments
Young graduates face a tougher market with fewer graduate-level job openings, higher youth unemployment, and competition from more experienced candidates. Overall employment rates have modestly increased, but unemployment has risen to 4.7%, reflecting mixed labour market conditions.
Recruitment Agencies Shutting at Fastest Rate in 15 Years
The UK recruitment market is seeing agencies shutting for business at their fastest rate in 15 years, with as many as 120 businesses appointing liquidators in the past six months. This increase, by 17 percent compared to last year, is the highest rate since the financial crash.
Financial Results of Major Recruitment Firms
- NES Fircroft's revenue for the year was $3bn, an increase from $2.6bn.
- Adzuna's turnover fell from £30.7m to £20.5m due to a "turbulent macro-economic environment and reduced recruitment advertising activity".
- London-listed PageGroup's gross profit fell from £444.1m to £389.3m during the first half of its financial year.
In summary, the UK recruitment market in 2025 is characterized by reduced demand and vacancies, increased candidate supply, constrained salary growth, a strong shift towards flexible and remote project-based hiring, and sectoral pockets of opportunity such as hospitality and education. These trends are shaping the financial and operational results reported by major recruitment firms.
- The challenging market conditions in the UK recruitment sector have led to financial losses, with major firms like NES Fircroft and Hays downgrading their profit guidance.
- Moreover, tax compliance regulations, such as IR35, are impacting contract recruitment, with high demand for roles outside IR35 due to contractors' preference for autonomy and tax benefits.
- Despite the increasing supply of candidates, the economy's overall growth has slowed, with weaker salary growth, reduced hiring activity, and a growing trend towards temporary positions and project-based hiring in sectors like technology and hospitality.
