The recruitment sector team at Saffery Champness, in partnership with the REC, surveyed over 80 recruitment businesses to understand the impact of the Coronavirus pandemic on their business as at 31 March 2020.
Recruiters prompt to react to a significant fall in projected net fee income
The survey indicated that recruitment businesses have already taken significant steps to reduce costs against a backdrop of plummeting revenues, with 73% of respondents predicting a fall in projected net fee income of more than 25% for the next financial year, compared with their original budget.
Significant reductions in staff costs
78% of those surveyed had already communicated plans for furloughing workers to their staff as at 31 March. Of those that were taking advantage of the government’s Job Retention Scheme, the extent to which it was being applied to their headcount was spread very evenly across the range of outcomes that we offered, as illustrated below. The fact that approximately 40% of respondents expect to furlough more than 60% of their staff, highlights the significant scale of cuts being implemented.
Almost 41% of respondents had also introduced reduced hours for some of their staff and 44% were introducing pay reductions, typically up to 20% of pay. We expect this is an indication that the 80% grant from the government is not being ‘topped up’ in most cases.
Hiring intentions on hold
Any plans for hiring new consultants have effectively been put on hold, with 94% of respondents having no hiring intentions. Other than furloughing workers, there appear to be no plans to reduce headcount significantly, with only 14% of respondents having started redundancy negotiations with staff as at 31 March.
Of those recruiters with job offers currently out for new staff, 40% of those offers had been rescinded, but the remaining 60% were presumably still expected to be honoured. A similar proportion of businesses had cancelled or deferred planned job promotions and pay rises, as shown below:
In it together
Our survey indicates that directors are accepting their fair share of the financial impact that this crisis is having on households. 78% of respondents said that directors’ remuneration would be reduced in 2020 – exactly the same percentage as the number of respondents who had also reported plans to furlough some of their staff.
Banks could be more supportive
51% of respondents had approached their bank for financial support and, of those that had, 55% had found their bank to be supportive. Whilst that may be the majority, we would obviously have hoped for this to be a much higher percentage in light of the government’s emphasis on the Coronavirus Business Interruption Loan Scheme (CBILS) being a lifeline for businesses during this crisis.
Commenting on the survey findings, Simon Kite, Head of the Recruitment Sector team at Saffery Champness, said
“It is pleasing to see that most recruitment businesses have taken decisive steps to reduce costs in the face of a significant fall in business volumes. The sector has embraced the Job Retention Scheme and this has safeguarded the jobs of a large number of staff (at least for the duration of the scheme), with the level of redundancies being well below that which would be expected given the anticipated fall in fee income.
“As has been widely reported in the press, the banks still need to up their game in terms of supporting businesses, but the changes to CBILS announced by the government on 3 April will hopefully help to release funds to those viable businesses that need extra liquidity in the short-term”.
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