A leading recruitment agency has indicated that the challenges in the white-collar job market are likely to continue well into next year, as global economic uncertainties hamper the anticipated recovery in hiring.

Timo Lehne, CEO of SThree, expressed disappointment in the absence of a recovery, noting that clients are frequently adjusting their project timelines due to uncertainties about the future. “Clients have shifted [their projects] from month to month, from quarter to quarter. The primary reason is uncertainty about the next 12, 18, 24 months,” he explained.

Businesses remain hesitant to expand their workforce, particularly with permanent positions, as employees are cautious about leaving their current roles amid concerns of being the first to be let go, especially with limited salary increases available.

Sanjay Vidyarthi, an analyst at Panmure Liberum, commented, “We anticipated some downward pressure on forecasts considering the lack of positive developments in the overall economy, but the extent indicated by SThree’s management is considerably worse than we expected.”

Founded in 1986 as Computer Futures, SThree operates under ten brands, serving 9,000 clients across 14 countries, specializing in recruitment for technology, engineering, and life sciences sectors.

The company expects to report an adjusted pre-tax profit of approximately £67 million for the financial year ending in November, aligning with analyst predictions.

Initially, it was hoped that profits would maintain similar levels into the current year, given expectations of a potential trading recovery in 2025. However, Lehne stated, “The anticipated improvement in market conditions has yet to occur.”

Further compounding the situation, SThree’s performance has worsened recently. The firm’s fee income for the year up to November fell 9 percent to £369.1 million, with a significant 15 percent decline noted in the last quarter compared to the previous year.

Lehne highlighted that the most severe downturn has been observed in Europe, where SThree derives a substantial portion of its fee income, attributing this to ongoing political and economic turmoil in key countries like France and Germany. Notably, the UK has struggled the most among SThree’s major markets, registering a 14 percent drop in income compared to 2023.

Despite hopes that the completion of the general election might prompt renewed investment from companies and government entities, those expectations have not materialized.

Andy Beach, SThree’s chief financial officer, noted, “There was a belief that post-election, government spending would resume on vital projects such as NHS systems, but in reality, such changes take time to materialize.”

The somber outlook caused SThree’s shares to plummet by 96p, or 26.6 percent, dropping to 265p, marking a four-year low.

Other prominent competitors were also affected by the market decline, with Hays shares slipping 3p, or 3.6 percent, to 79p, while PageGroup fell by 15.5p, or 4.1 percent, to 359p.

Job Market Recovery Remains Uncertain

Previously, recruiters experienced unprecedented success, recalling a time known as the Great Resignation when companies scrambled to hire, and employees were eager for increased pay and promotions.

While the slowdown in trades towards the end of 2022 was expected, industry consensus anticipated a brief cooling period of six months to a year.

Two years later, signs of recovery remain elusive.

Lehne characterized the current situation as one of the longest periods of market stagnation he has witnessed in nearly two decades in staffing, stating, “Typically, the market experiences fluctuations; usually, it descends and then rebounds. However, presently, it is stagnant.”

Many organizations have paused investments in new projects that would require hiring additional staff, while employees are reticent to change jobs, leading to a shift in concerns among executives from the high turnover witnessed in 2021 and 2022 to a current predicament of insufficient movement in staffing.

According to Lehne, this caution arises from underlying uncertainties, as the global economy grappled with slowed growth following an initial post-lockdown recovery, compounded by numerous geopolitical tensions.

“With crises such as the war in Ukraine and ongoing conflicts in various regions, decision-making among businesses remains paralyzed,” he remarked.

As a result, projections for hiring recovery have been deferred repeatedly. Initially, optimism suggested improvements could emerge by summer 2023, then early 2024, and now SThree believes conditions might continue to remain challenging through 2025.

“Currently, we do not see clear indicators suggesting that the economy will improve next year, particularly in Europe,” concluded Lehne. “While hope remains, the certainty is lacking.”