As the recruitment market continues to experience low unemployment and a tightening of candidate availability, I find myself having similar conversations with many clients, and increasingly prospect clients. It seems that even the savviest organisations tend to ignore economic principles, especially “scarcity” when they pick up the phone and call a recruitment agency. Is recruitment special, different or immune to the fundamentals of economics? If so, please let me know I would be keen to find out why! 

Supply & Demand 

First things first, it is important to understand some important economic pillars like “scarcity” as it relates to economics and recruitment. In economics, scarcity is defined as a condition of limited resources, where supply of a thing does not meet the demand for it.  

This is the basis for the microeconomic law of supply and demand.  

When the demand is high and the supply is low, the commodity in question becomes very expensive. When the demand is low, and the supply is high, the commodity becomes cheaper. Although these economic rules were set up to understand the market when it comes to commodities, they can also be applied to services. When a service provider’s skills are in demand, the price paid for this service should also increase. 

As we head towards the end of the year, the unemployment rate sits at 5.1% according to the most recent Australian Bureau of statistics data. Traditionally, 5% unemployment is considered by economists to be “full employment”, as almost everyone that wants a job, has a job. This is an important backdrop to any organisation looking to hire new staff or replace existing staff. In economic terms, the demand to hire is high while supply is running very low.  

The Value of Recruitment Services 

That brings me to point. I don’t understand why organisations continue to try to push prices down and, to be honest, why some recruitment agencies are allowing it to happen. 

Is there no value attached to our services by either ourselves or our customers? I believe that recruiters need to do a better job of explaining the benefits of using an agency, and companies should take more time to understand that a good professional recruiter is a truly worthwhile asset to your business. 

Yes, technology has made it easier to find some candidates, however if your organisation is genuine in their pursuit of high-quality talent then you may not find them on SEEK or Indeed, as they’re likely not actively searching for jobs. The best of the best need to be head hunted, in most cases. 

Moreover, active candidates in the current market have multiple job opportunities to choose from, so finding a good candidate is no guarantee that they will end up in your business. A professional recruiter provides a high-quality service, which includes not only finding the candidate but also the career guidance, supervising the interview process, and managing the job offer process. 

So how does this relate to price? 

Put yourself in the recruiter’s shoes – you have two organisations that require your services; both have high expectations in terms of timeline, quality, and offer management.  

Why would any professional, in any industry, choose to work hard for an organisation looking for a discounted fee, when they could work for an organisation happy to accommodate their standard fee?

If you are recruiting in data science, marketing insights, finance, or any industrywhere there’s an acute shortage of high-quality staff, then think about this:

Recruitment is like every other industry in that way – premium services are not cheap and shouldn’t be devalued or reduced to a simple decision based on cost. Take the time to meet with recruiters and to understand why they deserve the fees they charge. If you don’t think they are worth their fee schedule, then don’t use them at all because they obviously didn’t fill you with confidence in the meeting.  



I am more than happy to come out and speak to anyone about recruitment fees and to talk to them about what they should be asking recruiters when they meet with them.