Recruiters suffered a sharp slowdown in setting up permanent placements for job seekers in 2024, with an industry group suggesting the number of positions had fallen by more than a third compared to 2023.
The Recruitment and Employment Confederation (REC) said the UK economy’s lacklustre performance in recent years had hit businesses seen as essential to smoothing the flow of jobs across the country.
It said the sector made just 536,000 permanent placements in 2024 compared to 806,400 the year before and an average of 1m placements a year before the pandemic.
The data exposes the underlying labour market struggles in recent years, with separate monthly REC surveys known as the ‘report on jobs’ pointing to falls across recruitment agencies in setting up permanent jobs for candidates.
The gross value added by the industry fell slightly from £44.4bn in 2023 to £40.6bn though the number of recruitment businesses grew slightly.
REC chief executive Neil Carberry said the decline in permanent hiring shows the recruitment market had been slowing for three years, with firms across the UK hesitant about increasing headcounts.
“There has been a caution among clients over making long term client commitments,” Carberry added.
Recruiters to offer support on Employment Rights Bill
He also said that, while some firms chose to bring recruitment in-house, there was some evidence of a shift back towards recruitment agencies to offer businesses a lending hand.
One such reason for a changing trend in recruitment could be that agencies help firms to “think harder” about which individuals they hire as workers’ rights laws make staff more costly under changes in the Employment Rights Bill.
It was revealed on Thursday afternoon that, while Labour reneged on its ‘day one’ rights proposals that would allow workers to sue employers for unfair dismissal after just starting a job, the cap on compensation claims would be abolished.
It is understood that the lifting of the cap was a part of negotiations between the government, union bosses and business leaders to amend the bill, though some believed the full abolition went beyond industry groups’ expectations.