Global recruitment firm SThree has been significantly impacted by the deteriorating UK jobs market, making the region its poorest-performing large market. The consultancy, which specialises in connecting workers in science, technology, engineering, and mathematics with companies in need of staff, experienced a 26% decline in fees in the UK market for the fourth quarter, compared to the group’s average drop of 8%.
Fees, a critical revenue metric for SThree’s core business activities, fell to £27.7 million in the UK for the full year. The decline persisted throughout the year, with a 30% drop in the first quarter, followed by consecutive 27% falls in the second and third quarters.
Operating across Europe, Asia, and America, SThree saw its poor UK performance significantly impact its wider net fees, which fell by 12%. Despite these challenges, the group expects to meet its pre-tax profit target of £25 million.
Chief Executive Timo Lehne stated, “As anticipated, we have not yet seen a widespread market recovery, however, we have exited the year with a period of improving new placement activity, complemented by continued resilient extensions.” He added, “Whilst navigating a challenging macroeconomic backdrop, we have focused this year on what is within our control: positioning the business to capture emerging pockets of growth – achieving growth in two of our top five countries – sharpening our proposition, and maintaining a disciplined focus on operational efficiency.”
This comes as new figures from the Office for National Statistics (ONS) revealed the UK unemployment rate rose above 5%, reaching a four-year high. The number of payrolled employees decreased by 22,000 in September, while the unemployment rate hit 5.1% for the period between August and October, according to the ONS.
Liz McKeown, Director of Economic Statistics at the ONS, commented, “The number of employees on payroll has fallen again, reflecting subdued hiring activity, while firms told us there were fewer jobs in the latest period.”
Businesses across the UK have continued to face challenges following the Labour government’s first Autumn Budget, which increased taxes for employers. In April, a 1.2% rise in employer’s national insurance contributions, implemented by Rachel Reeves, added a significant amount to business tax bills, causing turbulence in the job market.
Ahead of the second Budget, which covers the period of unemployment data, many firms paused hiring and investment plans due to uncertainty over future tax policy. A Purchasing Managers Index (PMI) from S&P previously indicated a delay in decision-making for services firms ahead of Reeves’ Budget.
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