Executive summary
Key takeaways from the UK Recruitment Index 2023 survey
1
The average fee on permanent placements across all sizes of firm for 2022 is 18.6%, an increase compared to 2019 that is likely the result of the continuing post-Covid bounce back through the first three quarters of 2022.
2
North America is the most popular overseas market for firms. 38% are active there, followed by 28% in Germany. Of those businesses operating overseas, 51% say that North America has seen the greatest growth in placing candidates over the past year. However, North America is currently experiencing a slowdown in its economy which has impacted UK recruitment companies, particularly on permanent placements.
3
Brexit has not dented recruitment firms’ appetite for operating in the European Union (EU), according to our survey.
54% of respondents are still either partially or highly reliant on EU contractors – almost the same as in our 2019 survey.
4
Agile/flexible working is the most common benefit offered to recruitment staff and is available at 93% of respondent firms – a 29% increase compared to our 2019 survey.
While 7% of firms still have an attrition rate of greater than 40%, close to a third of agencies (32%) report an attrition rate of less than 10% and rates have improved for all sizes of firm compared to the 2019 figures.
5
43% of our recruitment businesses expect to incorporate an average pay increase of between 2%-5% for their next annual pay review while 39% predict a pay increase of between 5% and 10%.
6
Female representation among recruiters and other staff has risen from 41% three years ago to 47% in 2022, but female representation at board level in 2022 has stood still at the 2019 figure of 25%. Eight in ten firms say diversity and inclusion is a key business imperative and 68% have an organisation-wide D&I strategy.
7
Most of the recruitment businesses in our survey (63%) report increased appetite for a business sale – perhaps not surprising, given that many firms were trading at an all-time high during 2022.
8
More than half (51%) of firms have negative or very negative feelings about the UK economic outlook. The overwhelming majority (85%) of businesses point to the shortage of job candidates as their biggest challenge, while 73% nominate a shortage of consultants.
9
For the remainder of 2023, many survey respondents talk of “challenging times ahead”. However, respondents also highlight the many opportunities that still exist for firms. Niche skill sets remain in high demand and a return to growth in the contract/temporary market could be on the cards as employers look to manage more difficult trading conditions by maintaining a flexible workforce.
10
Recruitment performance levels will likely be sector dependent. Demand for job candidates in technology, plus other sectors like financial services and facilities management, should stay strong or at least resilient in the face of a downturn.
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