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Three months on... The impact of COVID-19 on the recruitment sector


By Natasha South, Operations Director, Camino Partners


At the beginning of April, the world was adjusting to a new format. We had been living in lockdown for a couple of weeks and as we hung on to the daily and weekly briefings, the truth is, none of us knew what was going to happen in the next few days, let alone months. At this point, I went down a rabbit hole of statistics to understand what the immediate and projected effects of COVID-19 were likely to be and published an article ‘The impact of COVID-19 on employment and the recruitment sector’ with some pretty scary predictions for Q2 2020. 


Well, Q2 is over and I certainly have many more greys and a couple of new wrinkles. For many of us, this was likely to have been the worst quarter in the history of our businesses but for those of us that are still weathering the storm, I thought I’d take a look at where we are three months on.


With the stark increase in universal credit claims in March (910%), we were expecting to see a steep rise in unemployment figures for the following quarter. However, despite initial projections being as high as 10%, the reality is that we only saw a .1% increase from March to May (3.8% to 3.9%). Interestingly, this modest increase is likely to be down to how we define the ‘unemployment rate’ as people who are unemployed, but have been looking for work in the previous four weeks and able to start in the next two (i.e ‘economically active’). Reports have suggested that employment rates have dropped significantly, but that many of these previously employed workers are in fact, not currently looking to return to the employment market, with people classified as ‘economically inactive’ increasing by 92,000. Further to this, the extreme increase in claims for universal credit may have been from stabilising initiatives opening the parameters for people to seek out financial support during this time. One distressing statistic though, suggests that despite only a .1% increase, the number of 16-24 year olds now unemployed increased by 47,000, with the highest percentage of this age group working in sectors heavily impacted by the crisis. 


As expected, the leisure & hospitality sectors were ravaged, with a 90% decrease in vacancies for Q2, along with retail, wholesale and industrial sectors down by 70% and an overall decrease of 60% across all sectors. This actually ended up being a steeper decline than that seen in the 2008/2009 financial crisis. However, greenshoots are emerging as we see job boards such as Reed reporting a 30% increase in vacancies listed from May to July, and confidence in the job market returning.


So where does that leave us? On the surface, some of these figures are a lot less scary than first anticipated, however with the new changes to the furlough scheme around employer contributions coming into effect from August, we can expect businesses still struggling to have no choice but to turn to redundancy to keep things afloat. This, alongside the increasing number of vacancies and therefore confidence in the job market, may see the ‘unemployment rate’ skyrocket, as people get back out onto the active market.


And what about Recruitment? Ultimately we wait to see what the impact of the adjusted financial projections have on the growth plans for the sector. Our own research suggests that the majority of recruitment firms have had to make tough but often needed decisions to streamline their functions and weather out the storm. In terms of non-sales functions, the majority of those furloughed are in administration, HR, marketing and training, with the highest percentage of redundancies seen in admin and HR. In terms of sales roles, we saw a higher amount of redundancies, where businesses were forced to let go underperformers and roles deemed as luxuries. In terms of recovery, there has been a reduced appetite to hire ‘trainees/graduates’ during what would usually be the busiest season of the year, and given the recruitment sector relies so heavily on the graduate market, this has undoubtedly contributed to the sharp increase in 16-24 years classified as unemployed. This is likely to stem from the adjustments needed to be made to ensure successful onboarding and upskilling in a remote workforce, but also that there is an unusually high amount of experienced recruitment talent on the market.


So what should we be expecting from the future? Well, ultimately no one has a crystal ball and can truly predict what is going to happen, but across the sector, from start-up to large corporate, the response to the COVID-19 crisis has been overwhelmingly positive. No longer the sector of ‘business dinosaurs’, the innovation and adaptability of the industry as a whole has been shining through. Whether it’s the way businesses are supporting the well-being of their employees, the flexibility in helping their clients and candidates or their early and fervent adoption of digital processes, as predicted the sector has given and will continue to give everything to keep the economy running and businesses moving.