Global recruitment chain Hays has revealed ongoing pressure on fees as permanent hiring weakens amid warnings the jobs market remains “as tough as ever”.
The London-headquartered firm, which is one of Europe’s biggest recruitment agencies, said net fees fell 3% on a like-for-like basis in its first quarter to September 30.
This was largely driven by a 7% fall in fees for permanent hiring, which the firm’s chief executive Mark Dearnley said remained “mixed” amid strong growth in North America and continued fragility in Northern Europe.
In the UK and Ireland, net fees fell 5%, with a 9% tumble for permanent role hiring.
AJ Bell investment director Russ Mould said the firm’s results showed the job market was “as tough as ever, particularly for permanent roles”, suggesting “companies lack confidence and don’t want to invest in their business for growth”.
Hays saw shares plunge as much as 12% at one stage in early trading on Monday after the market update, before later settling around 7% lower.
Hays’s net fees were down 3% for the quarter ending September 30 (Dan Lewis/VisMedia/PA)
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This past year, the FTSE 250 listed company closed its operations in Thailand and Mexico and divested those in the Czech Republic, Denmark, Hungary, Luxembourg, Romania and Sweden.
In its trading update on Monday, Hayes said it had also made “good progress” in reviewing its operations in Belgium, Brazil, Greater China, Malaysia, The Netherlands, Singapore and the United Arab Emirates, adding it was in “advanced discussions” for several of these businesses.
The firm previously announced it was aiming to concentrate on its core 16 markets to provide a “sharper focus” for the group.
Hays is among recruitment firms currently grappling a challenging jobs market which has seen employers take longer to hire candidates.
Earlier this year, the group said it had slashed its worldwide consultancy staff numbers by 14% in the year to the end of March, with a 7% cut to its non-consultancy employee base.
An investment director said the firm’s results showed the job market was ‘as tough as ever’ (Dan Lewis/VisMedia/PA)
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Mr Dearnley said: “Permanent activity remains mixed with sustained strong growth in North America but ongoing fragility in Northern Europe.
“Our medium term targets can be achieved through our own actions and we were pleased to make continued good progress with our structural cost and productivity initiatives during the quarter.”
But Mr Mould said: “While Hays has put a positive spin on the period, the numbers speak for themselves.
“Hays has been through enough up and down cycles to know that the key to survival is to adapt to changing market conditions.
“That’s not simply just cutting back on recruitment consultants when times are harder.
“It also means pivoting to more vibrant regions and being more selective in the types of roles, such as its current strategy to target higher salary positions on the permanent side.”
Richard Hunter, head of markets at interactive investor, said Hays remained in a “difficult spot” but was “well aware” of the challenges it faced, including difficult economic conditions and the impact of AI on jobs.
He said: “In response, the group is streamlining its strategy including a more focused geographical footprint as well as looking to recruit for more specialised positions which are expected to be less impacted by AI.
“Indeed, Hays’ own investment in AI could improve its productivity and profitability in due course.”