19 February 2021
Professional recruitment and staffing firms increase UK productivity by £7.7 billion each year by using their expertise to get people into the right jobs, new research from the Recruitment and Employment Confederation finds.
The study pointed to the significant impact of the recruitment sector on the UK economy. According to the REC, the work of professional recruitment firms supports £86 billion in gross value added across the economy, the equivalent of 4.3% of GDP, larger than either the accounting or legal industries.
However, the REC has warned over the financial consequences of bad hiring and have pointed out that approximately half (52%) of people in the UK say that businesses are doing a good job at recruiting efficiently, signifying that more could be achieved.
“The overall cost of a bad hire to a business is estimated to be three times higher than the salary paid, so getting recruitment right has the potential to be huge driver of recovery,” the REC stated. “In particular, the REC is calling for more UK businesses to drop wasteful approaches and treat recruitment as a critical part of their business success.”
Neil Carberry, Chief Executive of the REC, said, “For too long, many CEOs have spoken of people as their biggest asset, but left the process of bringing staff into the business as something to be done at low cost and high speed. By contrast, employers that treat recruitment as a priority issue because of the value it adds unlock competitive advantage. Bringing in the best talent boosts productivity, especially where organisations work with recruitment experts. Companies wouldn’t go to court without the best lawyers, they shouldn’t hire without the best recruitment and staffing service.
“With company and worker needs changing, and the country moving towards recovery from Covid-19, getting recruitment right will play a vital role in boosting the economy,” Carberry said. “We’re calling on government to work with the REC on the plan for jobs, ensuring that all forms of employment are considered in government thinking, so families all over the country can feel the benefit that good recruitment brings. From temporary work to permanent roles, at home or at a workplace, recruiters have stepped up through the pandemic to keep the wheels of our economy turning. And they will be more important than ever as we bounce back, helping government, businesses and employees build a better world of work.”
The REC’s study into the economic and social impact of recruitment also found that 28% of large businesses would consider hiring people who do not live close to the office reflecting the shift toward a more flexible labour market as a result of Covid-19. This approach could benefit large numbers of workers and result in a further boost to the UK’s productivity as employers open themselves up to a wider pool of talent.
Further data on the recruitment industry showed that each year, over 300,000 unemployed people use the industry to secure a permanent role, more than twice as many as those who go through the Job Centre. At the same time the report found that someone finds a new permanent job through a recruiter every 21 seconds.
The majority, or 78%, of people who found a job through a recruiter said it was a good match for them.
Meanwhile, 63% of businesses said that working with a recruitment agency had helped them increase the diversity of new recruits.
Per the report, jobs the recruitment industry matches support £29 billion in annual tax revenues, double the government’s R&D (research and development) budget.
The REC’s report found a worrying lack of urgency from many firms on improving diversity and inclusion. Under a third, or 30%, of companies said they were focusing more on increasing the diversity of their workforce, and 44% of people in the UK said they didn’t think the recruitment process was inclusive to people like them.
However, two in three (63%) businesses said that working with a recruitment agency helped them to increase the diversity of new recruits, and the REC is urging both government and employers to take serious action to create a more inclusive labour market.
“The report also shows the difference professional recruitment firms can make to diversity and inclusion, which more employers must now step up their efforts on,” Carberry said. “Recruitment professionals really can make the difference for their clients on improving equality of opportunity and diversity at work.”
