The pandemic has had a notable impact on the recruitment sector, with the economic uncertainty created leading businesses across the economy to postpone hiring decisions, therefore reducing demand for recruitment services.

Despite the size of the crisis, government support has protected the economy from the worst outcome, preventing widespread business failures and mass unemployment. This has allowed the market to bounce back, evidenced by the recovery of employer sentiment and a rapid recovery in the number of vacancies in the economy.

The impact of COVID-19 appears to have fallen more squarely on the temporary segment of the market, which is typically more vulnerable to fluctuations in business confidence and economic growth due to its shorter-term contractual nature. Whilst the permanent sector has flagged along with areas of the economy most impacted by the pandemic, it has also benefitted from sustained demand for skills in the life sciences and health care sectors of the economy.

Recruiters adapted to the pandemic rapidly, building off existing trends towards digitisation to include greater use of video. These developments are likely to galvanise the use of AI in the sector, as a shift in favour of online practices will speed up the development and adoption of the technology for candidate search and screening in the near term.

Key issues covered in this Report

  • The impact of COVID-19 on the recruitment market

  • Market size, segmentation and forecast of the recruitment market

  • How COVID-19 is reshaping recruitment practices and digitising the recruitment process

  • The impact of Brexit on services and what this means for recruiters

  • How IR35 changes will affect recruiters

COVID-19: market context

The first COVID-19 cases were confirmed in the UK at the end of January 2020, with a small number of cases in February. Rapidly rising case numbers led to the first national lockdown, starting on 23 March. It wasn't until 15 June that non-essential stores were allowed to reopen, followed by pubs, restaurants, hotels and hairdressers on 4 July and many beauty businesses on 13 July.

By September, it had become clear that the UK was at the start of a second wave, and social distancing measures were intensified. Continued increases in infection numbers led to Wales implementing a two-week national lockdown from 19 October, England announcing a month-long lockdown from 5 November and Scotland introducing a new five-level system of coronavirus restrictions.

Despite these restrictions, however, case numbers continued to increase. All four UK nations tightened restrictions further in January 2021, effectively leading to a full UK-wide lockdown.

On 22 February, Boris Johnson announced the roadmap to an easing of restrictions in England, starting with the reopening of schools on 8 March, followed by easing of restrictions on outdoor gatherings on 29 March, and with a hoped end to all restrictions by 21 June, although the growth of the Delta variant means this final lifting of restrictions was delayed. The Welsh and Scottish governments also gave more details on their plans to ease restrictions, with both nations taking a slightly more cautious approach to the one planned for England.

Even before the full re-opening of the economy, retail sales and Mintel’s own household finances tracker provided encouraging signs of a rapid return to consumer confidence, and a willingness to spend at least some of the savings that many households were able to build up over lockdown period.

The UK’s vaccination programme started on 8 December 2020. As of 15 June nearly 80% of the UK population had received their first dose of the vaccine and more than 57% had received their second dose.

Economic and other assumptions

Mintel’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its March 2021 Economic and Fiscal Outlook Report, but also take into account predictions made by other economic forecasts, including the Bank of England.

After the fall of 9.9% over the course of 2020, the OBR’s scenario suggests that UK GDP will grow by 4% in 2021 and 7.3% in 2022. GDP isn’t expected to return to pre-COVID-19 levels until the second quarter of 2022, although this is six months earlier than the OBR forecast in November 2020, mainly because of the faster than expected rollout of vaccines.

Unemployment is expected to peak at 6.5% in the fourth quarter of 2021. As with GDP, this is more positive than the OBR’s November forecast, but the OBR does raise the prospect of long-term scarring on employment, especially in the more exposed retail and hospitality sectors.

Covered in this Report

For the purpose of this Report, the market is segmented as follows:

Permanent: covers the activities of placement agencies (referred to as permanent agencies in this report), including the placement of individuals who are not employees of the agency, and other activities such as listing vacancies, as well as activities facilitated online.

Temporary: composed of agencies that directly supply workers to client businesses for a limited period of time to temporarily replace or supplement the workforce of the agency’s client, where the individuals provided are employees of said agency but not under the agency’s supervision at client work sites.

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