The Recruitment & Employment Confederation (REC) report covers 2023/4 and is gathered based on final performance by firms in their last full financial year. It shows the performance of the recruitment industry amid tough economic headwinds, and the essential nature of the UK’s world-class temporary labour force to hopes of an economic recovery.
The report estimates that on any given day in 2023, 1,058,300 temporary or contract workers were on assignment in the UK, up from 976,400 the previous year – an increase of 8.4%. Even though the estimated 22.6 million temporary or contract placements in 2023 is 12% down on 2022, the number of temps or contract workers on assignment on any given day is offset by the increased length of assignments – which has grown from an average of 15 weeks in 2022 to 22 weeks in 2023. This reflects the tendency of businesses to rely more on temporary labour in times of economic and political uncertainty, as well as the choice that individuals are making for flexible work.
What is especially clear from these headline results is how the path through uncertain times has varied by market segment, region and sector served. As well as a first sectoral breakdown, this latest RISR also includes a first-of-its-kind survey of recruiters’ attitudes and the uses of artificial intelligence.
Neil Carberry, REC Chief Executive, said:
“At the end of a year where many businesses have had to work especially hard to make the numbers add up, it’s good to be reminded of the great work that talent, staffing and recruitment businesses do, While the total contribution to Gross Value Added dropped a little, the scale of our contribution, at £44.4bn last year, is still colossal, especially when you appreciate the growth and opportunity for workers and companies that this represents.
“At a time when people need to build their career, and with new regulation on the horizon, today’s report is further proof that #TempworkWorks.Temporary work continues to provide essential flexibility for businesses and valuable opportunities for workers, offering both the chance to gain experience and access to specialised roles, no matter how difficult the economy has been and remains.
“A million people went to work as temps this morning, and surveys show they value the choice and opportunity this represents – often choosing it over direct employment because of its benefits. A vibrant flexible labour market is a precondition of growth and opportunity. We need to make sure new regulations protect the opportunities temporary and agency workers have – as well as the growth they enable. A temporary workforce the size of a major city’s population is relying on the government to make pro-job, pro-growth decisions after a rough Budget for business. Working with the recruitment and staffing sector, which generated Gross Value Added (GVA) of £44.4 billion last year, is crucial for anyone hiring and also for advice on retention strategies, training and inclusive recruitment practices.”
Neil Carberry added:
“The last year has been a difficult one for the recruitment industry with clients holding back while they awaited lower inflation and interest rates, an election and the right signals on growth. While the demand for permanent roles was strong as we exited the pandemic, figures now reflect a lull in demand as we wait for the economy to find its footing.”
The industry made an estimated 806,400 permanent placements in 2023, up 14.7% on the 703,000 in 2022. Pre-pandemic, recruiters were making an average of one million perm placements a year.
In an uncertain and, at times, strained year for recruiters and the economy as a whole the sector’s GVA in 2023 was still impressive at £44.4 billion in 2023. Despite this huge contribution to the economy, in real terms the number is down 7.3% compared to 2022. Our market forecast for temporary staffing in 2024 points to a wide range of experience, although almost all firms have been under pressure.
Other findings in RISR:
- The number of recruitment agencies held steady across the UK, with less than one per cent rise and fall in the regions and nations.
- There has been growth in the wider talent sector – offering different services to clients or employment businesses. At the beginning of 2024, an estimated 31,247 enterprises were operating in the UK recruitment industry. This was up by 5.4% on the equivalent figure at the start of 2023, which stood at 29,635. This marks the first increase after four consecutive years of decline.
- There was a 1.9% increase in people employed in the sector between 2022-2023.
Sectoral breakdown.
New to RISR 2023/4 is a sectoral breakdown.
In 2023, the largest proportion of permanent placements via a recruitment business was concentrated in the Secretarial/Clerical (18%) and Technical/Engineering (16%) sectors, indicating sustained demand for both administrative and technical expertise. And in 2023, temporary placements, by contrast, were led by Other Industrial/Blue Collar (18%) and Nursing/Medical (15%).
Despite concerns from ministers about the costs of the NHS using agencies, RISR finds that, for the temporary placement sector, although nursing and medical care accounts for 15% of assignments, their revenue market share falls to 13%, suggesting that the margin for these placements is relatively low.
Neil Carberry said:
“Other forms of provision to the NHS are routinely far more expensive to the taxpayer than on-framework agency. It’s time the debate on this caught up with reality – NHS agency staffing partners are keeping the service going.”
RISR includes an in-depth survey of recruiters’ attitudes and use of artificial intelligence.
A predominant area of AI usage is in job description creation, with 90% of recruiters reporting their use of AI tools for this purpose. This suggests that organisations are leveraging AI to craft compelling job postings that attract the right candidates, optimising their recruitment strategies from the outset.
Furthermore, while AI applications extend to CV screening (39%) and talent sourcing (32%), there is a noticeable decline in its use during later stages of recruitment, such as onboarding (7%) and interview analysis and insights (5%).
Among recruitment businesses, 68% said that the inability of AI tools to identify interpersonal skills was one of its biggest limitations, 60% cited AI’s inability to identify soft skills as a limitation, 38% saying it is difficult to assess transferable skills, 25% said a limitation is the possible bias in candidate selection and 21% said a limitation is data privacy and security concerns.
Neil Carberry said:
“AI has the potential to transform recruitment, streamlining processes and improving decision-making. But it cannot replace the human touch. Recruiters bring empathy, judgement and a deep understanding of candidates and clients; qualities that AI simply cannot replicate.”
