The “new world” of combined labour shortage and flat economy that the UK is experiencing at the moment is leading clients to cut recruiters’ margins either to boost pay offers they can make or protect their own budgets, Carberry warned.

In some cases, recruiters may have to walk away from “bad business” to “underpin the value you place on your skills and service”, he said. 

Giving the opening welcome address at the virtual conference, Carberry said he had seen two reactions recently in the recruitment world to the unusual economic and hiring climate, “a low road one and a high road one”. 

“On the low road, clients seek to cut the margin for recruiters to pad the offer they can make on pay or to protect their own budgets,” Carberry said. “This is short sighted and leads – as we have seen from the smallest clients to the biggest, where framework rates in the NHS have not been raised – to a world where recruitment is more difficult, and the client ends up paying more in the long run.”

He went on to say: “This kind of low road approach also cuts off some of the longer-term innovation that clients need – like outreach programmes to improve [equality, diversity, inclusion]. As a sector, we need to educate our clients about this being self-defeating.

“That is a big part of the work the REC is doing right now – but it requires confidence. From us and from you,” he emphasised. “Saying no to business that boosts your top line but not your bottom line is a difficult choice, but it is the right one, especially when interest rates are high and poor clients may end up using your business to access cheap credit.

“Across the country, REC members describe their markets as harder, but not necessarily bad,” Carberry said. “The good news is that clients still need to hire – our surveys show that – but their businesses are under pressure.

“This is a new world for us as recruiters. We are used to a world where hiring spikes as the economy grows and drops significantly when it doesn’t.

“That isn’t where we are now. A combination of labour shortage and a flat economy means clients are still looking to hire, even as they navigate significant complexities in their business and challenging demand in their market.”

Other speakers set for today’s conference include BBC economics correspondent Andy Verity and representatives of the main political parties on their plans for business in the run-up to next year’s general election.

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