Recruitment firm Hays has warned it may have to cut more jobs, after unveiling a 71% slump in profits during the first half of the year due to hiring difficulties worldwide.
Last year, Hays trimmed its workforce by 9% in response to sluggish job markets globally, cutting paid consultant positions by 12%, and by 7% in the last six months alone, bringing the total down to 7,971. The firm expects to further reduce its overall staff numbers by another 3% to 4% in the initial three months of 2024 as part of efforts to save approximately an additional £20 million in the latter half of this financial year.
This follows the annual savings of £30 million made between August and December.News about these job cuts came as Hays announced that pre-tax profits had taken a 71% hit to £27.6 million in the final six months of the year as net fees dropped by 11%.
Hays explained that consultancy roles were reduced through staff turnover and "performance management". Further restructuring took place in different regions, including management teams and back office operations, resulting in a 3% reduction of non-consultant roles in the final quarter of 2023. Additionally, three offices were closed as they merged operations in certain markets.
Hays' Chief Executive Dirk Hahn admitted the company was "making some difficult decisions" in light of the challenging conditions in job markets. He commented: "The half-year saw increasingly challenging conditions, with a clear slowdown in most permanent markets in December, while our larger temporary and contracting business again showed greater resilience."
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"We acted decisively to drive consultant productivity, better align our operations to market conditions and opportunities, and reduce costs. This said, I am not satisfied with our profit performance."
The company announced that the New Year's job activity and job flow mirrored what was seen in the second half of 2023, but it also revealed that temporary and contracting volumes have been down by 8% year-on-year so far into its third quarter. With permanent recruitment fees (which makeup 41% of the group's fees) falling by about 15% in the half-year, and the volume dropping by an alarming 25%.
Hays stated: "We continue to see slower client and candidate decision-making, leading to a longer time to hire. Our key markets continue to be supported by skill shortages, and we expect to see some further fee benefit in the second half from the positive effects of wage inflation globally, albeit at lower levels than in the first half, with fee margins stable."
In both the UK and Ireland, net fees fell by 14% in the first half, and earnings plummeted by 63%, landing at £5.7 million. The company cut 14% of consultancy roles in the region, reducing numbers from 2,082 a year earlier down to just 1,800.
The report said that temporary and contract hiring volumes in the UK and Ireland have dropped by 11% so far in the third quarter. It also added that while permanent job markets "remain tough but are broadly stable, with new job inflows in line with the second quarter".
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