SYK Recruitment Specialists among the 400+ recruitment agencies that went bust last year
Insolvencies of UK recruitment agencies in the last year have jumped to more than 400, as the sector struggles with the slowdown in the hiring market across the country.
For the third consecutive year insolvencies of recruitment agencies have increased, according to accountancy firms Mazars. The figures jumped by 14 per cent in the last year from 363 in 2022/23 to 413 in 2023/24, the highest number recorded by the firm.
The accountancy firm outlined that the number of job vacancies in the UK has decreased to 932,000 in the three months (November 2023 to January 2024), compared to 1.14m vacancies over the same period last year.
Back in January, Keighley-based SYK Recruitment Specialists, which specialised in the healthcare industry, asked the High Court to appoint an administrator. Others include Diamond Commercial Recruitment, based in London, D&A Recruitment, based in Sawston and Taylor Martin Recruitment, based in Nottingham.
Rebecca Dacre, a partner at Mazars explained that the “recruitment market can be notoriously cyclical”. On the latest figures, she said they “show that many recruiters are now really struggling.” She added that “many are at risk of insolvency as they deal with substantial debt burdens and weak cash flow.”
The firm pointed out that some recruiters in the temp market can have weak cash flow as they have to pay contractors before clients pay them. Also, recruitment companies often have to pay large salaries to their senior team members before the client pays them.
Mazars explained that a weakening economy will inevitably see clients delay paying suppliers.
Additionally, as Mazars stated, another issue facing the sector is that it is struggling to service the debt it took on during the pandemic.
The firm explained that many of these businesses took out government-backed Bounce Back Loan Scheme loans to survive. However, some are now unable to make repayments on these loans, forcing them into insolvency.
Dacre explained that “as the jobs market has slowed significantly over the last year, some recruitment agencies just haven’t been able to cover what can be the sizeable costs of debt and payroll.”
“Until the economy picks up, we’re likely to see this trend continue,” she added.
This week alone, listed-recruitment company Hays as well as FTSE 250 firm Pagegroup reported results which had both companies sound the alarm on the state of the hiring market.
Pagegroup’s figure dropped by 12.8 per cent to £219m while its fee earner headcount was also down by 100 on last year’s figures to 5,751. While Hays’ total fees brought in dropped 17 per cent compared to last year, the firm revealed in a trading statement for the first three months of the year.