Business | COVID-19 | Market

UK recession and the recruitment industry

Alarm bells are ringing after the Bank of England issued a UK recession warning, but will it really spell doom and gloom for the recruitment sector?


Back in May 2022, the Bank of England predicted hard times ahead for the UK economy with GDP figures expected to fall by 1% in Q4 2022 and a further 0.25% during 2023. While inflation heads towards double figures, the average petrol prices are 184p per litre compared with 130p a year ago.

You can understand why economists are worried. These black clouds would normally cast shadows over the recruitment market, raising fears over high unemployment, a lack of vacancies and slower wage growth.

Data published by software firm Bullhorn showed that hiring slowed between May and June. Taking into account the number of bank holidays, the drop does indicate that recruitment is tailing off towards summer, well ahead of the traditional seasonal falls in July and August.

The number of permanent job adverts added fell 12% month-on-month in June, while contract positions fell 11%. Year-on-year figures show permanent roles were down 2% in June, but contract positions were up 5%.

While these figures are a cause for concern, other factors make this UK recession different…

UK labour shortage

Whether you blame the Covid-19 pandemic or Brexit, no-one can deny that many sectors are facing a shortage of labour. While the Bank of England is warning that unemployment will rise as businesses feel the squeeze, this should be less severe than in previous UK recessions.

We have seen how labour shortages have affected the travel industry this summer, while farming and hospitality are still recovering from a lack of workers from Europe. According to data from the ONS, the number of job vacancies recorded over the last year has increased by 112.5%.

Mind the skills gap

While politicians want to see the UK become a high-wage, high-skill economy, the reality for employers is very different. Manufacturing and engineering companies are still struggling to find skilled staff which is holding back productivity.

While there has been a drive to provide more college courses and training in the workplace, this will take time. There should still be plenty of demand for recruitment businesses.

Staff retention is also becoming a headache as young people view their first job as an experiment. Once they get a feel for their new working life, they may decide to move to another sector or even another country. Companies feel like they are in a race to meet the ambitions of their new staff.

Post-Covid recovery

Many sectors of the economy are only now returning to pre-pandemic levels, which is adding momentum to the labour market. Research has shown how workers felt unable to change jobs during the lockdown, either due to the furlough scheme or through fears over job security.

These shackles have been removed and workers are keen to find new opportunities. This confidence has also been felt by graduates who are more positive about finding employment after finishing their studies.

Work is changing

The Covid-19 pandemic has changed the way we do business. The need to work from home has forced employers to undergo both a digital and structural transformation, which has seen benefits for recruiters. For example, the need for digital systems has seen a boom in technology recruitment.

However, the structural changes go much deeper than simply holding video calls. Businesses have been forced to react to the environmental and social changes, leading to internal programmes focusing on sustainability and diversity.

Whether it’s net zero or gender pay gaps, job seekers want employers to prove their credentials across a wide range of areas, which has created niche sectors within the recruitment industry.

This shift in attitude has given the power to skilled staff who demand flexible working and ethical policies. These issues have now become more important than pay.

How can we help?

If you are worried about how a UK recession might affect your recruitment business, call our friendly team on 0845 606 9632 or email

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