UK recruitment market faltering as the Australian labour market powers on
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After the disconcerting drop in employment last month, the ABS released the March labour market results today and the news was positive. Although the seasonally adjusted unemployment rate rose 0.1% to 4.1%, total employment rose 32,200, well above the average monthly rise of 25,670 over the past 12 months. The participation rate rose back to 67.8% after dropping slightly last month.
With some justification, the Albanese Government can claim the continued growth of the labour market as a significant accomplishment in the past three years. More than 1.15 million jobs have been added since March 2022, at an average monthly gain of just over 32,000.
The Opposition Leader, Peter Dutton, has misread the mood of the electorate, admitting as much when, last week, he walked back his commitment to cut 41,000 public sector jobs and forcing all federal workers to return to the office five days a week.
The Australian labour market continues to be a good news story for most of the electorate.
In the UK, the labour market reveals a very different story and mood.
According to data just released, the estimated number of vacancies in the UK fell by 26,000 across the most recent quarter (January to March 2025). This was the 33rd consecutive quarterly decline (reported on a rolling quarterly basis, monthly).
Most pointedly, vacancies are now 15,000 (1.8%) below their March 2020 quarter level, just before the COVID-19 lockdowns began.
By contrast, Australia’s vacancies (328,900) are 45% higher compared to just before the COVID-19 lockdowns began.
The UK’s total employment rose by 1.13 million between March 2022 and March 2025. In the same period, Australia’s total employment rose by 1.15 million. Australia not only beat the UK in total job growth, but it also smashed the UK in percentage terms, with an 8.6% rise in total employment, more than doubling the UK’s 3.5% rise.
The grim news in the UK just kept coming this week with the country’s highest-profile white collar recruiters, Hays, Pagegroup, and Robert Walters, all reporting a continuation of year-on-year sales and profit declines. The Hays share price is trading at a 13-year low. Pagegroup shares haven’t been this low since the early months of 2009, and you have to go back nearly 12 years to find Robert Walters shares trading this cheaply.
The dire mood of UK recruiters might be captured by a rather disspirting article on the Staffing Industry Analysts website, The recruitment industry is in crisis — and no one is listening , in which the author, Nick Gordon founder of Meraki Capital and Chairman of UK recruitment agency Hamlyn Williams, outlines his very pessimistic take on the future of the recruitment industry in the UK.
The opening sentence sets the tone for the 550 words that follow.
The UK’s recruitment industry is on the verge of collapse. I believe a perfect storm of government policy, high interest rates and technological shifts is putting thousands of jobs at risk.
Gordon continues,
This industry once thrived on human expertise and strategic hiring — agencies placed people in roles across the UK, helping businesses grow. But now, the balance is rapidly tipping towards automation, offshoring and cost-cutting measures by our customers. What was once a choice between efficiency and human capital has now become a necessity — businesses are embracing technology and offshoring just to survive and to cope with National Insurance increases at a rate I’ve never seen before.
Recruitment is going to be punished. Recruitment firms are being forced into catastrophic financial positions. I’m seeing two companies fold every week where normally we’d only see one a month.
Gordon, in fact, underestimates the rate of recruitment agency collapses; the official data reveals an average of ten agencies in the UK collapsed into insolvency every month of 2024.
Nick Gordon accuses the governing Labour Party of implementing anti-business and anti-growth policies (“As more recruitment firms collapse and companies turn to technology or offshoring instead of people, I have to ask: Who is really benefiting from these policies? Because for UK businesses and workers, the future is looking increasingly uncertain. These policies will directly impact the people Labour say they want to support”).
Looking at other data, investor confidence in the non-publicly listed UK recruitment market would appear to greater than Nick Gordon’s.
According to the 2025 ‘Recruitment M&A Annual Report’ from accounting firm BDO, the volume of purchases and sales of recruitment businesses in the UK rose by 49% in 2024 compared to the previous year, despite subdued economic conditions, with a total of 104 deals achieved during the year.
M&A activity for executive search companies was highlighted for its “exponential” growth in 2024, with over three times the number of deals completed last year compared to 2023.
The Australian recruitment market owes much to our UK cousins. Some of our most influential industry pioneers were born there (Andrew Banks, Julia Ross, and Rosemary Scott, to name just three), and others such as Greg Savage, gained critical skills and experience there. Nigel Heap’s first nine years in his home country provided an essential grounding for the huge impact he would have on the growth and profitability of Hays ANZ, taking them to new benchmarks that are almost certain never to be equalled.
For the foreseeable future, the UK will comfortably remain the third-largest recruitment and staffing market (by revenue), with more than double the expenditure of seventh-ranked Australia.
However, it looks like the golden age of sales and profit in the UK recruitment market is gone and unlikely to return anytime soon.
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Thanks for the analysis, Ross.
I’d say it’s a little concerning that nearly half of all new jobs created in 2024 were in government. This isn’t a sign of a dynamic, private-sector-led recovery – it points to a bloated public sector and an economy increasingly reliant on government spending. That’s not a sustainable or healthy employment landscape.
Add to that the 14% exit rate of small businesses – an unprecedented figure. Yes, there’s a higher rate of new business entries, but much of this appears to be a shift from traditional employment to contracting – likely as a result of rising costs and the great move to WFH. For those of us in the recruitment industry, this means a major uptick in competition and a fragmented market that’s harder to navigate.
I hope things improve in recruitment – as it’s been a painful 2-3 years – but I am worried that current gov policy might delay the recovery.