What is the ruling on continuing in a job where corruption and favoritism are prevalent, and is it permissible for the person responsible for hiring to choose poor and needy applicants, knowing that his refusal to collude may cause him personal problems, and that he wishes to please Allah and have a clear conscience?

Your task in employment is a great trust that requires competence. If competencies are equal, then drawing lots is resorted to. The poor person is not to be preferred over the rich unless the employment conditions stipulate so. It is not permissible to accept intercession (wasta) to employ unqualified individuals or to prefer them over others, because that is deception. If leaving your job will lead to its loss, then do not leave it. Ask Allah for steadfastness and assistance, and be truthful and firm upon the ethical, Shar'i principle. As for previous sins, repentance erases them, and the one who repents from a sin is like one who has no sin, and Allah loves those who repent.