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HR Services Markets In Limbo As Skills Mismatch Worsens

Date

09 Apr 2024

Sections

Social Europe & Jobs

The HR services industry pursued an upbeat trend in 2022, growing global turnover by 8.3% for a total of €632 billion (USD666 billion) in sales revenues. Positive results recorded as per the number of people supported, the opening of agencies and hiring of internal staff demonstrate the attractiveness of the sector and its key role in navigating the complexities of labour markets. As the skills mismatch worsens, the industry, however, faces a standstill.

The HR services industry demonstrated remarkable resilience and adaptability throughout 2022, following a stellar recovery in 2021 from the global economic downturn caused by the pandemic. According to the Economic Report 2024 of the World Employment Confederation (WEC), the global industry’s turnover grew 8.3% in 2022, totalling €632 billion (USD666 billion) in sales revenues.

 
“In 2022, the HR services industry remained an anchor for millions of individuals and thousands of companies worldwide, facilitating the return of job seekers to employment and filling vacancies. Early indications suggest that the trend has not carried on in 2023 as the agency work activity dynamics stayed largely negative way throughout the year,” observes Marius Osterfeld, Chairman of WEC’s Economic Affairs Committee. “While the number of open job postings started gradually reducing, the gap is still wide, not least due to a skills mismatch. This fact points to a great need and opportunity for training and (re-)skilling of job seekers.”
 
The first half of 2022 was still upbeat for the HR services industry, but agency work activity in terms of hours worked started declining across the globe towards the end of the year. Tight labour markets, characterised by high levels of job scarcity, peaked helping the global unemployment rate reduce from 6.1% in 2021 to 5.9% in 2022. At the same time, production limits due to lockdowns in crucial global economies like China and the rising demand after lockdown lifts triggered inflation.
 
From innovative remote work solutions to the prioritisation of workforce well-being, organisations within the HR services ecosystem demonstrated agility by putting the needs of both clients and workers at the heart of their operations. Largest HR services markets’ sales revenues, such as the US, grew a solid 8.3% in 2022, while Australian and Japanese markets expanded 13.4% and 12.7% respectively. Turnover in Germany grew 8.6%, while the UK registered a modest 1.8% increase. Among smaller markets, double-digit growth was registered in Canada (27.3%), Switzerland (+18.8%), China (18.3%) and India (+17.4%).
 
Despite the overall positive results in terms of the number of people that the HR Services sector helped find jobs, the agency work penetration rate was largely stable at 1.9% compared with 2021, indicating that the increase in the working age population in 2022 from the year before was proportional to the increase in the number of people placed in jobs. The HR services sector remains an attractive sector, recording steady growth both in the number of agencies (+ 1.9%) and staff (+ 2.2%).
 
“Collaboration and innovation are key to successfully navigating the complexities of today’s labour markets, and strong data collection is equally instrumental,” emphasizes Viktorija Proskurovska, Labour Market Intelligence Manager at the World Employment Confederation. “This report is WEC’s cornerstone for informed decision-making and strategic planning, securing ongoing growth for the HR services industry. A benefit not only for the industry but also for society at large.”
 
For a more detailed analysis of 2022 data as well as first insights into 2023 data, including regional outlook, dive into our Economic Report 2024. This year’s edition also offers socio-demographic data on agency workers.

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