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Professional staffing firms remain resilient post-Covid, but a shortage of recruiters threatens recovery

by jcp

27 October 2021

Despite the struggles of the pandemic and the stripping back of business support schemes such as furlough, recruitment firms remain positive about their financial stability, but skills shortages are threatening operational recovery. That’s according to the latest edition of the APSCo UK Recruitment Index, produced in conjunction with Saffery Champness.

In the survey of staffing businesses, all firms indicated that they believed they had sufficient cash flows compared to last year, despite the ending of the furlough scheme and the upcoming need to pay deferred VAT and PAYE payments post-Covid.

While firms feel financially stable, the concerns around skills availability are plaguing many businesses. According to the study, the biggest challenge facing firms is a shortage of candidates, with almost half (47%) of those surveyed reporting this as a main concern. The report also revealed that this dearth of talent extends into the staffing sector itself, with 43% of recruitment businesses worried about a shortage of recruitment consultants.

Ann Swain, CEO of APSCo, commented:

“The market is over-saturated with vacancies at the moment which would normally be music to the ears of recruiters. But with skills shortages, the continued impact of Brexit and the long-lasting effect of IR35 still hanging over our heads, the recruitment market is struggling to meet demand. Concerns around the number of available candidates aren’t just limited to client placements. Recruitment itself is facing a brain drain of resources, with staffing businesses indicating that retaining high performing consultants is tough at the moment.”

“While it’s certainly a difficult economy, it’s not a doom and gloom scenario. Organisational resilience is looking more promising than last year and firms appear to feel more financially stable at the moment. However, it is important that staffing companies prepare for the market ‘settling down’. The hiring spike we’re experiencing is being significantly influenced by the events of the last 20 months, but this will come to an end at some point. It’s likely that we won’t see the longer-term impact on the economy and inflation until the second half of 2022 and it’s crucial that recruiters plan for a hiring ‘slow-down’ next year.”

Jamie Cassell, Partner at Saffery Champness added:
“The 2021 Recruitment Index reveals that recruiters are in a stronger financial position in 2021, with firms of all sizes scoring themselves higher than last year for having sufficient cash and borrowing facilities in place to fund growth. However, the Index shows that shortage of candidates and resource are the main areas of concerns for the sector, with both of them likely to have an impact on potential growth. With opportunities continuing to present themselves as the global economy moves out of the pandemic it is essential that recruiters can adapt, whether by altering their incentive schemes and remuneration packages, increasing their use of innovative technology or the continued use of flexible working practices. These factors will be important to the success of firms going forward”.