Employers Cannot Hire Fast Enough
Workers are quitting their jobs in record numbers. We are reading it everywhere and every news outlet is telling us it is because the economy is booming. The pandemic also helped workers realize what they value most in life. Some are quitting to re-skill and switch careers to something more meaningful for them. Some are quitting because they received an offer already for a job that better positions them for the future career they want. As we watch millions of unemployed people across the US and the world begin to sign new employment agreements, there is one industry nobody seems to be talking about.
Inflation and a tight supply of available labour have pushed salaries higher. Individual workers will see their salaries get boosted as US job openings are at their highest point in over a decade. But as a group, recruitment agencies are going to capture more of this growth than any other business. Recruitment agencies typically charge a percentage fee. That means they participate fully in the wage gains of any workers they place. That goes straight to their top line growth numbers.
Recruitment agencies also have more potential clients than ever before as the post-COVID mindset grips business owners and hiring managers across the global economy. These businesses are more that willing to pay extra to secure the talent they need in order to capture this once-in-a-lifetime boom.
An Input to Every Growing Industry
After a moderate decline in 2020, these businesses are set to roar back into the forefront. Companies like Randstad, Adecco, and Robert Half own an outsized portion of the market share and are worth a look.
The highest quality recruitment firms are those with longstanding relationships with clients and an active investment in R&D. Trends like automation and machine learning stands to disrupt the industry and give early adapters an unfair competitive advantage.
As the global economy lurches back to life and receives the pent-up demand consumers have been holding back, nearly every industry will experience blistering growth. Recruitment agencies are an input to absolutely every industry that is short-staffed. It is rare to have a business with exposure to nearly every growing industry but recruitment will deliver in the coming years.
New Industries Experiencing Rapid Growth
During the pandemic, new industries experienced growth nobody could have predicted. Industries like cryptocurrency, NFTs, e-learning, VR, IoT, and virtual health all benefited from the pandemic in one way or another.
As newer industries, the businesses in these markets lack the stable supply of highly trained workers needed to keep up with demand. That means that to harness the growth in the market, these businesses needed to hire and train newer employees or fight fiercely for the limited pool of skilled workers available. This creates the ideal conditions for professional recruiters to step in and help businesses. In a growing economy, the cost of a recruiter is miniscule compared to the cost of missing out on growth.
Reskilling Occurred During COVID Pandemic
While workers were stuck in their homes and in many cases furloughed from their jobs, they were planning. There were months of sitting at home and thinking about what we want to do with our lives when things open back up. No doubt millions of people decided not to return to their old jobs at all. Many will have re-skilled for new industries entirely, leaving their old employers high and dry.
If you hated your job and you had an option to learn a skill that could bring you into the new economy (possibly subsidized or even free thanks to a government program) surely you would take it too.
Again, the result is a shortage of qualified workers for lower skilled jobs.
Government Policy Designed to Stimulate Business Growth
Governments around the world have shifted policy to encourage survival of small business and retain the precious jobs that were not wiped out in the early days of the pandemic. That helped to buoy optimism among business owners. With low interest rates as a medium-term commitment and with a fear of easing policy too soon, governments have written businesses a blank cheque.
That means businesses can hire (often partially or fully subsidized) new employees and invest in new projects. Again, recruitment agencies stand to benefit. More businesses growing creates a push to hire a finite number of skilled workers, many of whom will need convincing to take any new job. People are exhausted from change and not typically looking for a shift from their job if it has been stable throughout the pandemic.
The economy is red-hot. With limited workers who are both skilled and available, recruitment agencies stand to benefit as the largest hiring push in history occurs in the coming years.
Thank you for your loyal readership.
The Financial Star.