Recruiter Hays earns record result due to weaker pound and wage hikes

Salary inflation and a depreciating pound helped recruitment agency Hays to achieve its best ever quarterly performance in the three months to October.

Net fees at the London-listed company climbed by 19 per cent over the period, against the equivalent period last year, on the back of continually rising margins.

Since pandemic restrictions began to be loosened last year, widespread labour shortages across the developed world have forced businesses to hike wages to try and attract candidates in a cutthroat jobs market.

Competition: Widespread labour shortages across the developed world have forced firms to hike wages to try and attract candidates in a cutthroat employment market 

This has created a financial boon for the British recruitment sector, the business model of which usually involves them receiving commissions every time they successfully place a jobseeker with an employer.

Hays achieved record results in 11 countries during the last quarter, including in its largest territory, Germany, where net income jumped by over a quarter thanks to skills shortages driving contractor volumes to their highest levels ever.

The division further benefited from skyrocketing fees for human resources hires, record income from permanent placements, and strong expansion in industries such as engineering, accountancy and finance.

More income was earned in September than in any previous month, while record fees were also attained from Latin America, Malaysia and the technology sector. 

In the British Isles, net fees increased by 11 per cent, with demand supported by income from the technology and education specialisms and fee growth of over a third in the Republic of Ireland. 

Demand across Australia and the United States was relatively weak compared to other markets, but Hays noted that sterling’s weakness against the Australian and US dollars provided a significant revenue bump.

Performance: Hays achieved record results in 11 countries during the last quarter, including in its largest territory, Germany, where net income jumped by over a quarter

The pound has slumped since the summer of 2021 following a surge in inflation caused partly by the loosening of Covid-19 restrictions, Russia’s full-scale invasion of Ukraine and interest rate hikes by the US Federal Reserve.

Hays has calculated that at the pound’s current value against its two main trading currencies, the euro and Australian dollar, last year’s operating profits of £210.1million would be around £9million greater.

Alastair Cox, chief executive of Hays, hailed the company’s ‘good start’ to the fiscal year, although he observed activity in some markets had declined as economic problems have mounted.

Earlier this week, fellow recruiter PageGroup revealed that tempering client confidence had led to a hiring slowdown in certain places, and Robert Walters said its UK business had been damaged by a ‘volatile’ political and economic situation.

Many firms have begun to curb their hiring plans amidst severe inflationary pressures, tightening monetary policy and heightened fears of recessions, while vacancy rates are starting to drop from historically steep levels.

Julie Palmer, a partner at corporate restructuring specialist Begbies Traynor, said: ‘The current climate cannot last forever, and the uncertain economic outlook suggests companies may need to start to rein in spending if they are to mitigate the impact of soaring inflation.

She added: ‘The likes of Hays will be watched very closely in the coming months as economists and investors alike look for any sign of weakness.’ 

Hays shares closed trading 3.8 per cent higher at 107.1p on Thursday, yet their value has tumbled by more than a third in the past 12 months.  

This post first appeared on Dailymail.co.uk