Hays’ fee slide puts Michael Page under scrutiny as hiring slowdown widens

The signal from Hays: demand is thinner, not collapsing

The most important detail in Hays’ update is not simply that fees fell. It is where they fell and which type of hiring was weakest. Permanent recruitment fees declined 7% like-for-like, compared with a 1% decline in temporary and contracting fees. That points to a labour market in which employers are still filling near-term operational gaps but remain reluctant to make longer-duration commitments.²

That distinction matters for macro readers. Temporary work tends to hold up better when companies need flexibility. Permanent hiring is more closely tied to confidence in future demand, margins and investment plans. Hays’ own outlook reinforced that split, saying it expected stable near-term conditions, with greater resilience in temporary and contracting work than in permanent hiring.²

For UK equity readers, the same message is visible in the company’s operating actions. Hays is not waiting for a cyclical rebound. It has reduced consultant headcount, cut non-consultant roles, targeted higher-fee assignments and continued a structural savings programme. Alliance News reported that consultant headcount was down 9% year-on-year, excluding country exits and disposals, while non-consultant headcount was down 15%.⁷

UK and Germany are the pressure points

The regional pattern is the core read-through for Europe. Hays’ UK & Ireland net fees fell 5% like-for-like in the quarter, with permanent fees down 9%. The private sector, which accounted for 73% of UK & Ireland fees, declined 6%, while the public sector fell 3%.²

That suggests the UK slowdown is not confined to a single pocket of public-sector restraint or lower-paid junior roles. It is showing up in private-sector hiring decisions, where recruiters are most exposed to corporate confidence. The Independent cited AJ Bell’s Russ Mould as saying the results suggested companies lacked confidence to invest for growth, particularly in permanent roles.⁶

Germany remains the other major drag. Hays said German net fees fell 6% like-for-like, with engineering down 23% and finance down 9%, partly offset by technology growth and stronger construction and property fees.² Reuters added that weakness in Germany’s auto industry was a key factor and cited management commentary that German temporary staffing volumes with automotive exposure remained heavily down year-on-year.⁴

The implication is that Europe’s recruitment downturn is both cyclical and sectoral. In the UK, the problem is broad employer caution. In Germany, it is compounded by industrial weakness, especially in autos and engineering-linked demand.

Growth elsewhere is not enough to change the group story

Hays did report areas of resilience. Reuters said net fees rose 8% in the US, 12% in Canada, 27% in China and 2% in Japan, helped in the US by demand linked to construction in data centres and energy.⁴ Hays’ own statement also pointed to strong temporary and contracting performances in Japan, Spain and the US.²

But those pockets of growth did not prevent a group decline. That is why the market reaction was negative, even though the 3% like-for-like fall was less severe than some expectations and an improvement from the 8% fall in the same quarter a year earlier, according to Reuters.⁴

For investors, this is the key tension: the rate of decline may be easing, but the duration of the downturn is now hard to ignore. Fourteen consecutive quarters of lower net fees imply that listed recruiters are not merely digesting a short post-pandemic normalisation. They are still operating in a market where corporate hiring appetite has not properly recovered.

Michael Page is the cleaner sector test

Michael Page’s Q3 update is important because it should help separate Hays-specific factors from the broader recruitment-sector signal. Hays is reshaping its portfolio, exiting or reviewing several countries and narrowing its focus to 16 core markets.²⁶ It also moved to around £45 million of net debt at 30 September from £20.1 million of net cash at the end of June, which the company attributed to seasonal cash flows, exceptional payments and share purchases.⁷

Those factors complicate the equity story at Hays. Michael Page, by contrast, offers a cleaner read on white-collar professional hiring across the UK, Europe and global markets. If Michael Page reports similar weakness in UK and European permanent recruitment, investors will have stronger evidence that the slowdown is sector-wide. If it shows stabilisation, Hays’ update may be read more as a mix issue tied to Germany, autos and restructuring.

The share-price reaction suggests the market is leaning toward the sector-wide interpretation. Reuters reported that Hays’ update pulled down peers as investors focused on prolonged weakness in European jobs markets.⁴ That makes Michael Page’s commentary on client confidence, time-to-hire and permanent placements more important than headline revenue alone.

London finance jobs add to the macro warning

Separate labour-market signals are moving in the same direction. Alliance News reported that London financial-services vacancies fell to 1,200 in September from 1,719 in July, citing Morgan McKinley research, with vacancies down 11% year-on-year.¹⁵

That is not a perfect proxy for the whole UK labour market, but it is a useful leading indicator for white-collar demand. Finance, professional services and technology hiring tend to respond quickly to uncertainty over costs, regulation, rates and transaction activity. A failure of vacancies to rebound after the summer is consistent with the message from Hays: employers are not freezing all hiring, but they are becoming more selective and slower to commit.

Equity conclusion: cost cuts can protect margins, not prove recovery

Hays is trying to manage the downturn through productivity, cost savings and portfolio focus. The company reported 8% growth in consultant net-fee productivity and said it had delivered about £10 million of structural savings in the first quarter, as part of a plan for roughly £50 million of annual savings in FY27.²⁷

That may support margins and cash flow if revenues stabilise. But it does not yet prove that end-demand has turned. The more important variable for the sector is whether permanent hiring stops contracting in the UK and Northern Europe.

For now, the listed-company evidence is consistent with a labour market that is slackening rather than breaking. Temporary hiring is more resilient, selected geographies are growing, and Hays’ September exit rate was better than the full-quarter trend. But weakness in UK private-sector permanent recruitment and German industrial hiring means the burden of proof has shifted. Michael Page now needs to show that Hays is an outlier. Otherwise, recruitment stocks may become a more direct equity-market expression of Europe’s fading corporate confidence.