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Recruiter Hays shares crash as UK election hit hiring

Tom Belger
Finance and policy reporter
Hays blamed the UK election for falling client confidence and hiring. Photo: PA

Shares crashed in recruitment firm Hays as it issued a profit warning on Thursday, blaming the UK election for hitting client confidence in taking on new staff.

The company (HAS.L) said its net fees from private firms had dropped by 8% in the final three months of 2019 in its UK and Ireland business.

It said in a trading update for its second quarter both candidates’ and firms’ confidence had been “significantly impacted” by political uncertainty, particularly in December.

The company also saw fees falling in other markets, with the bushfires in Australia, general strikes in France, and Germany’s manufacturing woes hitting recruitment levels.

READ MORE: Recruiter slashes jobs as UK vacancies dry up

“Growth slowed markedly in December, driven by specific events in key markets: general strikes in France, tragic Australian bushfires, and the UK election,” said chief executive Alistair Cox.

“Each event impacted markets already facing challenging economic conditions and low business confidence.”

The company said its net fees globally were down by 7% year-on-year, and lowered its operating profit expectations for the first half of its 2020 financial year to around £100m ($130.5m). It reported profits of £124.1m in the same period last year.

Its share price dropped by 4.9% in early trading in London on Thursday.

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The profit warning comes two days after rival PageGroup (PAGE.L) also sounded the alarm over political uncertainty in the UK and the fires in Australia holding back recruitment.

PageGroup said its fourth-quarter profit had fallen 2.6% year-on-year to £205.6m, but its full-year profits were up 5% to £856m.

The company, which includes Michael Page and Page Personnel, confirmed it had slashed staff numbers, with its ‘fee earner’ headcount down by 54 and support staff down by 37.

Hays did not provide actual figures on its own headcount, but said its consultant workforce had fallen by 1% over the quarter and group headcount was expected to fall in the next quarter.

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But Cox said the Conservatives’ decisive election victory “may provide impetus over time” for better trading conditions. Public sector clients also appeared to shrug off the uncertainty, with fees up 8%.

He called the bushfires in Australia “tragic and unprecedented” and said the firm’s first priority was its staff’s safety and wellbeing.

He added: “The rebound from these events and our New Year 'return to work' are thus particularly important, and we are closely monitoring activity levels. Overall, we expect near-term macro conditions to remain difficult, but see continued opportunities for growth in key specialisms like IT.”