In 2019, the year before the Covid pandemic disrupted the world economy, the HR Services sector recorded five per cent year-on-year growth to deliver a turnover of €495 billion.
The World Employment Confederation Economic Report 2021, based on 2019 data, details how the industry was on a positive trajectory before the Covid crisis hit in Q1 2020. The pandemic has upended economies and labour markets around the world and brought a halt to the growth that the private employment services sector had experienced in recent years. The industry estimates that the global agency work sector contracted by as much as 18 per cent in the first half of 2020 alone.
In 2019, more than 60 million people were placed on the labour market by the HR Services sector. This underlines the important role our sector plays in supporting people and companies to manage change – a role that was to prove in invaluable over the subsequent 12 months as the sector worked to deliver innovative solutions in transitioning workers from economic sectors closed down by the pandemic into newly-in-demand sectors such as healthcare and delivery services.
2019 market overview
Agency work remains the largest segment of the HR Services industry and grew one per cent year on year in 2019. It generates €391 billion in total revenues (including agency work revenues generated by MSP and represents 79 per cent of total sales). The largest 15 markets represented 91 per cent of global industry turnover in 2019 with the US market generating almost one-third and the five largest markets – USA, Japan, UK, Germany and France – contributing over two-thirds.
Europe is the largest region for agency work – delivering 43 per cent of global revenues. North America delivers 33 per cent and APAC 21 per cent. The global penetration rate of the agency work sector, which indicates the share of agency workers in full-time equivalents among the working population, remained stable at 1.6 per cent in 2019. Most of the largest markets have a penetration rate above the global rate, with the rate in the UK, the Netherlands and France being almost twice as high.
Managed Service Providers (MSP) and Recruitment Process Outsourcing (RPO) were the best performing industry segments in 2019, achieving double-digit growth across most regions at 13 per cent and 25 per cent respectively – likely fuelled by tight labour market conditions pre-pandemic. MSP reached a 135 billion turnover and RPO 5.7 billion.
Direct recruitment too saw strong growth at six per cent compared with the previous year. Asian and Pacific markets expanded significantly – with Japan and China growing 30.1 per cent and 17.1 per cent respectively and the US was up nine per cent. The UK by contrast fell 16.8 per cent.
The career management sector – which has an estimated value of 1.9 billion – saw a slight decline of one per cent in 2019 due to contraction in the largest markets (US, the Netherlands and UK) whose combined turnover accounts for some 50 per cent of the global sector.
Over 161,000 private employment agencies delivered services to companies and individuals during the course of 2019 – thanks to the more than three million internal staff employed across branches in 41 countries worldwide.
Looking to the future
The global pandemic and subsequent lockdowns around the world resulted in many sectors contracting significantly. HR Services also experienced unprecedented declines in many countries – both in number of workers placed and industry revenues. The gradual opening-up of economies during the 2nd and 3rd quarters of 2020 has been tempered by the reintroduction of lockdowns but has served to merely slow the recovery, not halt it.
Agency work markets around the world were significantly impacted by the pandemic and subsequent lockdowns. It is a proven early-warning signal for economic health, and the declines observed in agency work were swiftly followed by official GDP data reporting contractions in many markets. However, while both the volume and value of agency work fell below levels witnessed during the last global economic crisis in 2009, the speed at which markets are recovering is much faster.
In short, our 2019 economic report depicts the calm before the Covid-storm. Today, as vaccination programmes kick-in around the world and economies start to get back on track, the HR Services sector stands ready to support businesses, workers and governments in driving labour market recovery and getting the world back to work.
