Recruitment industry grew its economic contribution to £42.3 billion ahead of pandemic
Recruiters’ direct contribution to the UK economy reached £42.3 billion in 2019, accounting for 2.1% of UK Gross Value Added (GVA)*, according to the REC’s UK recruitment industry status report published today.
That represents an 8% increase on the previous year, meaning the industry’s contribution is bigger than many other sectors including arts, entertainment, and recreation (£30.7 billion) and the insurance and pension funding industry (£28.6 billion).
Neil Carberry, Chief Executive of the Recruitment and Employment Confederation, said:
“The year leading up to the pandemic was challenging. Economic uncertainty ahead of the Brexit General Election and a slowing global economy made progress difficult. It’s a testament to recruiters’ resilience that they grew their contribution to the economy by a huge 8% to £42.3bn in 2019. They helped over a million people into permanent roles before the pandemic, and had just under one million staff out on temporary placements every day. That hard work put the industry in good shape going into lockdown.
“Employment businesses have shown the best of themselves since then. The UK recruitment industry stepped up – supporting our supermarkets when the strain was at its highest, helping the NHS care for the most vulnerable, and keeping the UK open for business wherever we could. The forecasts in this report should surprise no-one. Bouncing back from falls in revenue of 20% or more will not be instant, but the trends are good, and a new economy brings new opportunities.
“This year has shown us what we can achieve by working together. From helping to design the unprecedented Job Retention Scheme, to shifting right to work checks online, and making sure the Business Rates Retail Discount extended to high street recruitment businesses. 2021 isn’t going to be easy – but together we’ll bounce back.”
COVID-19 has been tough as expected
COVID-19 restrictions continue to have an adverse impact on recruitment activity and therefore on the profits of recruitment firms. The REC estimates that COVID-19 has resulted in a 22% drop in direct GVA in between March and September, including a 19% reduction in permanent placements compared to 2019. This number may grow due to March and April placements reflecting pre-pandemic work, and a longer recovery path for permanent placements, as indicated by other REC surveys. There was a 30% drop in the number of temporary/contract workers on assignment each day, year-on-year.
Other figures from the 2019/2020 report include:
- Of the £42.3 billion contributed to the economy, £37.8 billion (89%) was achieved through temporary/contract placement activity, and £4.5 billion (11%) was achieved through permanent placements activity
- The industry made one million (1,008,000) permanent placements in 2019, only slightly lower than in the 2018/19 financial year (1,070,000). On any given day in 2019 985,300 workers were on temporary and contract assignments
- The number of people employed in the recruitment industry in 2019 remained stable at 119,000 – roughly the population of Colchester
- The vast majority (81%) of the 31,000 recruitment enterprises in the UK are micro-businesses, with fewer than 10 employees – though this year’s survey shows some evidence of consolidation
- The majority of client businesses said they were satisfied with both the candidates supplied by their recruitment partners (68%) and the recruiters’ overall service (71%).