A 20% slide in City recruitment is like nothing that has been seen before, the boss of one of the Square Mile's top recruitment firms admitted today.

And yesterday's attempted rescue of the economy through a banking bailout and interest rate cut will not help either, Hays finance director Paul Venables warned.

“It is unprecedented,” said Venables, whose agency specialises in filling middle and lower ranking professional jobs in London's banks, financial services companies and accountancy and legal firms.

“It is not like the downturn of five or six years ago [post-9/11 and the bursting of the dot-com bubble], which reversed pretty quickly. And it is very different to the employment slump we saw at the beginning of the 1990s,” he added.

The crash in City-related recruitment is bad news for Hays as it is a major part of its single largest operation the UK finance and accounting arm, bringing in 12% of group revenues.

“We saw a 20% fall in the quarter to the end of June and we have seen the same again in the quarter to the end of September and, with three to five weeks' visibility ahead of us, we are seeing more of the same.

“Yesterday's move by the Chancellor and the Governor of the Bank of England are, of course, welcome but a whole lot more has to be done to persuade companies to start investing again and hiring people,” Venables said.

“What we are seeing is our clients who have been spooked by the events of the last few weeks and our candidates who need to be confident that they can move to a new job and not be made redundant.”

Hays is also hurting from the crash in the housebuilding industry, which makes up a further 25% of its UK operations.

In a statement to investors, it said: “Accounting & Finance net fees were lower than the same period last year due to declining client and candidate confidence, particularly at the lower end of the market.

“Construction & Property had a difficult quarter, reflecting tough market conditions in the private sector across all regions. City-related activities and Legal were impacted by a significant reduction in demand.”

Hays' figures are now showing the classic signs of an economy in contraction, with temporary placements continuing to grow at a rate of 8%, overtaking permanent jobs.

Total revenues in the UK were down 8% as the gloom in the Square Mile and Canary Wharf was partially offset by a continuing boom in jobs in the public sector, especially in health and education. Total group revenues, which include European and Australian operations, were up 4% in the quarter.

Shares in Hays have halved in the past year but were today up 5.75p to 79.75p. However, they are still within touching distance of a 10-year low.
Hays' woes mirror those of Michael Page, the specialist in City middle managers, which reported similar slumps earlier this week.