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YOU will have seen the headlines - from “£150k starting salaries for graduates” and “Firms fighting for staff” to “Lidl to become UK’s highest-paying supermarket”. We are in the midst of a jobs boom.

And that can only be very good news for the UK’s recruitment giants; firms like Hays (HAS), which is due to give its latest trading update on Tuesday.

But it hasn’t always been like this. Back in 2020 when the pandemic first took hold, profits at recruitment firms crashed as job hires dried up and everything was put on hold.

For investors the ‘new normal’ back then saw staff furloughed, companies cautious and recruitment freezes in place, as the entire world watched and waited to see how the pandemic would play out.

When Hays itself was cutting jobs - a thousand of them - and warning that its then-full year profits would almost halve as there were “no signs yet” of companies restarting hiring as lockdowns ease across the world, you knew things were bad. The fact that dividends were suspended and shares fell, added to the pain for investors.

But then the great unlocking arrived in the summer of 2021 and those record job vacancies were something to be celebrated by the recruitment firms, like Hays, eager to get staff on payrolls and commission in the bank.

Between September and November 2021 a record 1.22 million jobs were begging to be filled and 2021 has turned out to be a record year, after all, for the recruiters.

Hays rival Robert Walters (RWA) has since reported a record December performance, with fourth-quarter net fee income a third higher than last year and PageGroup (PAGE) has proclaimed 2021 a “record year”; bolstered by a strong final quarter. PageGroup’s fee earner headcount is now the same as before the pandemic and full-year operating profit is expected to be marginally ahead of its already boosted guidance of £165 million.

The question now though is, probably, whether the job market can afford to keep booming? Robert Walters is adamant it will, but PageGroup, back at the half-year results in the summer, admitted it was unclear whether improved performance was the result of “pent-up supply and demand, or a sustainable trend”.

Maybe those record salaries and the race to snap up staff at any cost will eventually put the brakes on the jobs market. Or maybe the thrivers and survivors of the pandemic will fall short of the number needed to really boost the coffers at the recruitment firms. Maybe Hays will shed some more light on where we are at, right now, and the shape of things to come, on Tuesday.

More on Hays

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