Timo Lehne, who has led SThree as CEO since just before the global financial downturn, describes the current hiring landscape as unprecedented in its stagnation.

“This is the first instance of a prolonged downturn I have witnessed,” Lehne remarked. “Typically, we see a decline followed by recovery, often shaped like a ‘U’ or a less defined ‘V’. Currently, it just feels flat.”

Similarly, Dirk Hahn, the CEO of Hays, has over 30 years of experience in recruitment and agrees that the current slowdown is unlike any other he has encountered.

Following the lifting of pandemic restrictions, recruiters enjoyed financial success as the economy reopened. The upheaval of work preferences driven by Covid-19 led many, especially those over 50, to opt-out of returning to traditional employment roles, resulting in what became known as the “great resignation.” For much of 2021 and 2022, recruitment firms saw record profits.

However, the market shifted as concerns over economic stability began with Liz Truss’s mini-budget in the fall of 2022, because of rising borrowing costs and both domestic and global uncertainties. Geopolitical tensions, particularly in Ukraine and the Middle East, alongside persistent inflation, compounded these anxieties. By early 2023, hiring was stalling, leading to a decline in recruiters’ fees that has continued to worsen.

This downturn is not isolated to the UK; major recruitment firms like Hays, Pagegroup, Robert Walters, and SThree have all reported declines across multiple markets, particularly in France and Germany, where economic challenges are significant.

Major recruitment agencies have noted that companies’ hesitance to hire stems from a lack of confidence about the economy, resulting in a noticeable reduction in new job openings.

According to data released by Adzuna, the job-seeking platform, job vacancies saw a 7 percent decline from November to December, marking the steepest monthly drop since June 2020, with predictions for further decreases in January.

Candidates remain cautious about transitioning to new roles due to fears of job stability, particularly in light of promotions and significant pay increases secured in 2022.

James Hilton, CFO of Hays, observes, “The aftermath of the great resignation resonates among job seekers. Individuals are more hesitant to switch jobs, while client demand for new hires is weakened. Many companies are not expanding their workforce and are careful about replacements.”

It’s still too early to measure the impact of President Trump’s trade policies on the hiring landscape, but experts agree that any shifts in confidence from clients or candidates could have serious repercussions. Hilton stated, “The ramifications of Trump’s trade policies on our business are still unclear; we may need a couple more quarters for clarity.”

The stark reality of the slowdown is evident in the financial performance of major recruiters. In the first quarter of this year, Page, Robert Walters, and SThree saw their fees drop by an average of 24 percent compared to the same timeframe in 2022. Concurrently, they have also reduced their consultant workforce by a similar percentage.

The stock market has been unkind to these firms as well, with Hays shares plummeting by 52 percent, Page shares declining by 59 percent, Robert Walters shares dropping by 69 percent, and SThree’s market valuation decreasing by 48 percent since the beginning of 2022.

SThree has shown some resilience due to its focus on contracts and temporary placements, which constitute over 80 percent of its business model, whereas Robert Walters has a heavier reliance on permanent position placements.

The permanent hiring market has been particularly impacted by the ongoing geopolitical and economic uncertainty. Hilton explains, “Employers are adopting a ‘try before you buy’ strategy, preferring temporary employees initially. Temporary hires provide flexibility in uncertain times, allowing for a trial period before permanent commitments.”

Initially, recruiters held hope for a rebound by the start of 2024, then later pushed expectations to summer 2024, and now many anticipate sluggish hiring conditions to persist at least for the remainder of the year.

Despite the decrease in fee income, the rate of decline appears to have stabilized. Currently, fees in the first quarter of 2025 are down approximately 12 percent year-on-year, which mirrors the decline seen during the same period last year.

While recruitment firms grapple with their longest downturn, unemployment rates remain surprisingly stable. Job vacancies have diminished from 1.2 million to 781,000 since the final quarter of 2021, yet the unemployment rate remains low at 4.4 percent.

This paradox could be attributed to “labour hoarding,” where companies retain employees despite uncertain market conditions, thereby leading to fewer layoffs but also a contraction in hiring efforts which, in turn, reduces vacancies for recruiters.

Various factors contribute to businesses choosing to retain their workforce, with uncertain hiring prospects being a dominant reason, as highlighted in a 2023 report by the Bank for International Settlements. A reduction in available talent often leads businesses to value their current employees more, thus halting recruitment efforts.

Recruiters have also noted a rise in counteroffers made to candidates they are attempting to entice to new roles. This shift in trend reflects the diminished pay increases being offered now compared to previous years.

Previously, during the great resignation, employees could expect salary hikes of 15 percent or more upon switching jobs. Currently, estimates indicate potential increases of only about 5 percent.

Hilton notes, “Counteroffers become enticing when a company offers an additional 3-4 percent to stay, especially compared to a mere 5-6 percent raise to switch jobs. Many might think it’s better to stay put rather than risk the unknown.”

Few industry experts anticipate a sudden revival in hiring amidst the surrounding unpredictability linked to tariffs. Both businesses and candidates will need to regain confidence that has dwindled over the past two-and-a-half years for recruiters to experience a resurgence in favorable market conditions.

Hilton remains optimistic, stating, “At some point, the situation will shift. People will not remain in the same positions indefinitely; they seek advancement and salary increases. A slight improvement in news coverage could reignite the desire for job changes once again.”