High peaks and deep valleys are no stranger to Randstad. The corona pandemic gave the employment agency a dramatic year, but in 2021 it again recorded a record turnover of 24.6 billion dollars.
Founded more than sixty years ago as Uitzendbureau Amstelveen, Randstad is today the largest player in the temporary employment market with activities in 39 countries worldwide. The company is listed on the Amsterdam stock exchange.
It was also turbulent there, the past two years. At the start of the corona crisis, the price fell below 30 euros, and then climbed through trial and error to a peak of 65 euros in mid-February 2022. Since then, the share has fallen again, with 46 euros, the price is now back at the October level. 2020.
The Randstad’s rapid recovery phase is over, says Konrad Zomer, analyst at ABN Amro – Oddo BHF. “We are at a tipping point. The macroeconomic situation is suddenly uncertain. There is fear of a recession.” Inflation, explains Zomer, is not even negative for Randstad. This leads to higher salaries, and since employment agencies charge a percentage of a temporary worker’s wages, this works out in their favor. But in a recession, it is of course the temporary workers who are the first to disappear from companies.
Decrease in broadcasting hours
And although all kinds of branches are still suffering from a staff shortage, there are also developments that mean Randstad is noticing a decrease in temporary hours. For example, the course of the corona pandemic. “The Covid test streets in the Netherlands were filled with temporary workers,” says Hans Pluijgers, analyst at Kepler Cheuvreux. “In recent months, fewer people have been needed there. That may increase again in the autumn and winter, but we don’t know that yet.”
Another important sector for employment agencies, also in other countries, is logistics. Pluijgers: “PostNL recently reported a decrease in the number of parcels sent. That will eventually have an effect on the temporary employment market.”
Compared to last year, there is now a decrease in temping hours, as showed last week from figures from sector organization ABU† ABU publishes figures over four-week periods and looks at the performance of the entire sector compared to the same period in 2021. Where there was a turnover increase of 5 percent in April, this was a loss of 4 percent in May. The number of broadcasting hours decreased by 11 percent. That doesn’t say anything about the exact figures of Randstad, but both analysts expect sales growth to slow down significantly in the third and fourth quarters.
In the long term, other developments are important for Randstad. For example, automation will reduce the demand for people in certain sectors. Pluijgers: “Will assembly line workers still be needed in ten years’ time? †
Automation also affects the temporary employment sector itself: companies can now find temporary staff more and more easily via apps such as YoungOnes or Youbahn. “There is no party in between,” says Pluijgers. “You lose your added value as a ‘matchmaker’ as an employment agency.” Having the best database is the new key to success.
For specialist jobs, the scarcity of candidates continues and job requirements change faster and faster. According to Pluijgers, Randstad will therefore increasingly focus on the professional secondment segment and HR services.
But those trends do not directly affect the current share price. The temporary employment market is quite cyclical, says Zomer. “In this market, we don’t look further than four or five weeks ahead.”
A version of this article also appeared in the newspaper of June 20, 2022