Robert Waters, a leading global recruitment firm, has issued a stark warning about the jobs market, indicating that the ongoing hiring slowdown is likely to persist, with a full recovery not expected before 2025. This forecast follows a significant financial downturn for the company, which reported a 15 percent decline in gross profit for the second quarter, totalling £84.8 million. This decline is part of a broader trend, with the firm’s first-half profits dropping by 18 percent overall.
The UK division of Robert Walters experienced particularly severe setbacks, with a notable 18 percent decrease in gross profit for the second quarter and a 19 percent decline over the first half of the year. Chief Executive Toby Fowlston attributed these results to the lingering effects of the volatile pandemic years, compounded by ongoing macroeconomic turbulence and political uncertainty. “This period of market adjustment is now longer in duration than previously expected,” Fowlston said. “Macroeconomic turbulence and political uncertainty are restraining client and candidate confidence in certain geographies.”
A Gradual Path to Improvement
Fowlston emphasized that the company anticipates a gradual improvement in market conditions, though substantial progress is not expected before 2025. He noted that current market conditions present a broader range of potential outcomes for the full year compared to historical trends, reflecting heightened uncertainty and variability.
In response to these challenging conditions, Robert Walters has made significant adjustments to its workforce. The company has reduced its staff by 5 percent since the first quarter and by 15 percent year-on-year, now employing 3,625 individuals. The firm is also adopting a highly selective approach to replacing staff, focusing on aligning its workforce with current demand conditions.
Industry-Wide Challenges
Robert Walters' difficulties align with broader trends across the recruitment industry. Other firms, such as PageGroup and Hays, have also reported decreased gross profits for the second quarter. Hays has noted additional challenges stemming from political uncertainties related to upcoming elections in the UK and France, which have further complicated trading conditions.
Regional Declines and Market Trends
Robert Walters' second-quarter results highlighted a 15 percent decline in gross fees across the Asia Pacific region, a 14 percent drop in Europe, an 18 percent fall in the UK, and a 14 percent decrease in the rest of the world. The UK, in particular, faced more severe conditions, with net fee income plunging by 21 percent, compared to a 6 percent drop in London. Recruitment outsourcing, which constitutes over half of the UK’s fee income, fell by 19 percent.
Following the announcement, Robert Walters' shares experienced a 3 percent decline in morning trading on Monday. Investors are bracing for an extended period of uncertainty as the recruitment sector navigates through these challenging times.
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