Recruitment giant Hays is feeling the pinch as job cuts in the financial sector see a decline in profits in the recruitment industry.

Paul Venables, Finance Director for Hays, told The Independent: “It’s a musical chairs business – we need someone to leave before we can replace them, and in many cases they are not.

“Fees are down mainly thanks to a weakening in the City. It’s a weakening confidence, and clients making a clear decision to reduce the number of permanent staff.

“Until confidence improves, we’ll see subdued demand.”

Venables said this explains the seven percent decline in UK business during the last quarter of 2011.

Despite the decline in the UK, other markets have been making steady increases.

Strong growth in the Australian mining industry as well as an increase in Germany and France has seen earnings rise by 28 percent and 20 percent respectively.

This growth helped Hays post a nine percent jump in net fees towards the backend of 2011.

But even Asia saw growth slow dramatically, down from 34 per cent in the third quarter to 16 per cent in October, November and December.

Venables said: “Three months ago, banks in Asia were looking to increase their headcount aggressively but now – even there – they are being very selective about hiring.”

Photo by Images of Money

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