Recruiter Hays hikes dividend amid booming demand for staff

The boss of one of the UK’s biggest recruiters has said wage inflation has risen to levels not seen since before the 2008 financial crisis.

Alistair Cox, chief executive of Hays, said pay has been steadily rising ‘for a good nine months’ as firms hiked salaries to attract and retain staff after the UK’s unemployment rate dropped to a near a 50-year low of 3.8 per cent.

‘It’s a phenomenon we haven’t seen for at least a decade,’ Cox said. ‘The last time we saw proper wage inflation was before the great financial crisis [2007-08].

‘So to see the sort of wage inflation that we’re now seeing is very different.’

Firms are struggling to find workers to fill job vacancies, which in the three months to July stood at a near-record high of 1.27m.

But despite high demand for staff, pay rises are struggling to keep up with inflation, which is running at over 10 per cent and has effectively wiped out salary increases for many employees.

The battle for talent across the world has been good news for recruiters such as Hays, who have cashed in on booming demand for staff.

The group posted record fees of nearly £1.2billion for the year to the end of June, a 30 per cent increase year-on-year while profits more than doubled to £210million from £95million in 2021.

Hays also flagged record results across 24 of the countries it operates in including Germany, its largest market.

As a result of the strong performance, the firm added another £18.2million to its share buyback programme and paid out a special dividend of 7.3p per share to investors. The stock rose 1.9 per cent or 2.1p to 116.9p following the figures.

Victoria Scholar, head of investment at Interactive Investors, said despite concerns about a UK recession, Hays’ results showed the recruitment sector was faring ‘extremely well’ due to ‘strength in the underlying labour market, skill shortages and historically high unfilled job vacancies in the economy’.

She added the company was ‘well positioned’ to benefit from a ‘mismatch’ between demand and supply of labour across the UK jobs market.

In order to help alleviate the shortage of labour, Cox said the economy needed people who had retired or left the workforce during Covid-19.

‘If people are minded to come back to work, the opportunities are there,’ he said. ‘The world of work is very welcoming to them. Organisations will be keen to talk to people who want to come back.’

A trend of older workers returning to the jobs market has been flagged previously as the cost-of-living squeeze causes more to find work again as bill rise.

The move contrasts with the so-called ‘Great Resignation’ shortly after the pandemic, when legions of workers quit or moved jobs after lockdown.