Published Tuesday 16th February 2021

This was a year like no other. 2020 has been, without a doubt, one of the toughest years for the recruitment industry in living memory.

The impact of COVID-19 on the labour market and recruitment industry has been profound. After the pandemic hit the UK in earnest and lockdown measures were introduced in late March, business confidence and hiring activity plummeted. And though placement and vacancy numbers recovered through the late summer and autumn, especially for temporary work, rising COVID-19 case numbers and new restrictions have slowed the recovery.

All this means that 2020 saw a significant decline in both placement numbers by recruiters and their contribution to the economy. The number of temporary and contract workers on assignment every day was also around 30% lower than it was in 2019.

However, there is some good news. The total demand for staff has increased for the first time in several months and billings rose at the sharpest pace for over two years, as companies often opted for short term staff due to lingering uncertainty around the coronavirus disease (COVID-19) pandemic and Brexit. Redundancies related to the pandemic and fears over current job security drove a further marked increase in the availability of both permanent and short-term staff in December. That said, the overall rate of expansion was the softest recorded since April.

Healthcare registered the sharpest rise in temporary vacancies during December, followed by Blue Collar. Of the four sectors to note lower demand for short term staff, Hotel & Catering saw the steepest rate of contraction.

Agency Staff

There will be an increase in the demand for agency staff in the short to medium term to deal with staff shortages, sickness, and a largely fluid scenario as a result of Brexit and slow recovery from Covid which will be helped by the vaccination programme now underway.

With a difficult year behind the recruitment industry, greater availability of candidates to undertake temporary work and the looming increase in the minimum living wage (April 2021), competition among agencies is fierce which means that now is the time for all companies to review their agency staff cost.

Companies must evaluate all of the component elements which added together make up the charge that appears on an invoice from an agency. What is the salary of the worker? Is the ENIC percentage charge appropriate and what is the margin being charged by the agency? Does this margin increase with various shift patterns? Additionally, they should be mindful of the agency fee charged to convert a temporary worker to permanent member of staff and what, if any, of the placement fee is returned should the permanent placement prove unsuccessful. Now would also be good time to review the KPIs in place and perhaps more importantly to review the process of administratively managing agency staff, which most companies know can be irksome to say the least.


The recruitment fee for permanent staff is based on a percentage of salary and can quickly become thousands of pounds.

In the current, competitive climate, companies should be actively looking for the best deal but it is not always easy to do that unless you have good market knowledge. Businesses should also be reviewing their process for hiring candidates ensuring the shortest possible time from establishing need to job offer. How is this process tracked both externally and internally to insure there are no hold ups and identify where delays are occurring? Whilst fees based on percentage salary are the norm, much cheaper options are available and would be worthwhile considering.

There are a host of improvements that can be made to both the financial element of hiring permanent and temporary staff and the administrative processes for each. As the economy begins a slow recovery now is a good time to review both aspects to achieve significant savings, improved processes, and better candidate selection.

About the Author: Glenn Cotter, joined ERA in 2003 and has helped many clients across most industry sectors with their staffing needs; whether that be for recruitment or using temporary agency staff.