Recruiter Hays hit by hiring droop in UK and Germany

Hays has become the latest British recruiter to report a fee slump following a hiring downturn across the UK and Germany.

The London-based business revealed its like-for-like net fees fell by 15 per cent in the three months to December compared to the same period the previous year.

It recorded a 21 per cent fall in permanent hiring fees, a 10 per cent decline in temporary fees, and double-digit percentage drops in many of its core territories. 

Net fees decreased by 13 per cent in Germany, where the economy has just contracted for the second year running due to lower exports, rising competition from China and soaring energy prices.

Hays noted its clients were taking longer to employ people on a full-time basis, while the struggling German automotive industry was impacting temporary hires.

Meanwhile, fees plunged by 14 per cent in the British Isles amidst much weaker trade in London, the North of England and the Republic of Ireland.

Trading difficulties: Hays has become the latest British recruiter to report a poorer result following a hiring downturn across the UK and Germany

Outside Europe, the FTSE 250 firm posted falls of 14 per cent across Australia and New Zealand, 26 per cent in Latin America, and 38 per cent in Hong Kong.

Hays’ trading update follows similar announcements by fellow recruiters PageGroup and Robert Walters earlier this week.

Both companies declared their gross profits shrank in the fourth quarter of 2024 due to sluggish performances in the UK and Germany, which they blamed on subdued client and candidate confidence.

They have also continued reducing staff numbers, with Robert Walters slashing their headcount by 17 per cent to under 3,000 last year. Hays cut its own workforce by 15 per cent over the same period.

Interest rate hikes by central banks since 2021 have made borrowing more expensive for businesses looking to expand, causing many to implement redundancies or hiring cutbacks.

The global technology industry has been especially brutal, announcing over 583,000 job losses since 2022, according to tracking website Layoffs.fyi.

It has not just been impacted by higher interest rates, but people spending less time online after the end of pandemic-related restrictions.

Dirk Hahn, chief executive of Hays, said: ‘It is too early to say if recent weakness [in permanent recruitment] reflects a more sustained market slowdown or shorter-term deferrals of client and candidate decision making.

‘However, we are delivering on our strategy to focus on long-term growth markets and build a structurally more profitable and resilient business.’

Hays expects to earn about £25million in pre-exceptional operating profits during the first half of the 2025 fiscal year, which is at the bottom end of consensus forecasts.

Hays shares were 1.7 per cent up at 73.65p just after midday on Wednesday but have contacted by over a quarter in the past year.