- Permanent hiring fell at its fastest pace in 10 months during May.
- Demand for temporary workers continued to rise across the UK.
- Recruiters say businesses are delaying long-term hiring decisions amid growing uncertainty.
UK employers are increasingly turning to temporary workers instead of permanent staff as economic uncertainty, rising business costs and geopolitical tensions weigh on hiring decisions.
The latest UK jobs market data from KPMG and the Recruitment and Employment Confederation (REC) suggests many businesses are becoming more cautious about expanding their workforce. While demand for temporary workers continued to grow in May, permanent recruitment recorded its sharpest decline in 10 months.
The findings add to concerns about the health of the UK labour market, with employers appearing reluctant to make long-term commitments as they navigate a challenging business environment.
Flexibility becomes the priority
Recruiters reported a strong increase in temporary job placements during May, reflecting a growing preference among businesses for flexibility.
At the same time, permanent hiring slowed sharply as employers weighed the impact of higher operating costs, economic uncertainty and global events, including tensions in the Middle East.
Neil Carberry, chief executive of the Recruitment and Employment Confederation, said, as quoted in a news report, that businesses were "tapping the brakes on permanent hiring" while relying more heavily on temporary staff to fill gaps in their workforce.
The survey, which gathered responses from around 400 recruitment and employment consultancies across the UK, also found that the number of job candidates increased as redundancies rose and concerns over job security intensified.
The growing pool of jobseekers has coincided with weaker demand from employers.
As a result, starting salaries and temporary wages rose only modestly during May. Recruiters pointed to tighter company budgets and a more cautious hiring environment as key reasons behind the slower pace of pay growth.
The picture varied across industries. Nursing, healthcare and social care were the only sectors to report stronger demand for permanent staff. Retail experienced the steepest decline in permanent hiring activity.
Warning signs for the labour market
The report comes against a backdrop of broader concerns about employment in Britain.
Official figures recently showed the unemployment rate rising to 5 per cent in the three months to March, while wage growth has begun to slow.
Separately, a government-backed report warned that the number of young people not in employment, education or training has exceeded one million for the first time in more than a decade.
Business leaders have also raised concerns about the availability of entry-level roles. Simon Wolfson, chief executive of retailer Next, has warned that a sharp decline in junior positions could contribute to higher youth unemployment.
Jon Holt, group chief executive of KPMG UK, said, as quoted in a news report, that ongoing uncertainty at home and abroad was encouraging employers to delay recruitment decisions. He added that while some companies were using temporary contracts to retain flexibility, many permanent hiring plans were being postponed altogether.
For now, the figures suggest businesses remain willing to hire when needed, but many are choosing short-term solutions rather than making long-term commitments.
