Rising business costs and a lack of confidence in the economic outlook are causing many UK firms to pause permanent hiring to focus more on increasing their temp numbers.
That’s according to a new report, which shows the jobs market is experiencing fewer job opportunities as well as a rise in redundancies.
Fewer permanent opportunities, but rates are on the up
The latest KPMG and REC, UK Report on Jobs survey, compiled by S&P Global, showed that in December, demand for staff continued to weaken, with vacancies for permanent staff falling more sharply than for temporary positions.
The number of candidates continued to expand last month, with the main driver of this trend put down to redundancies.
The figures did, however, show that for permanent workers, the rate of starting salary inflation continued to recover from September’s multi-year low, rising to the greatest extent since last May.
Temporary rates of pay also increased after declining over the last two months.
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A reminder of the pressure employers are under
Commenting on the findings, Neil Carberry, REC Chief Executive, said, “It’s always difficult to draw conclusions from jobs data in December, but the fact that the market slipped back a little in November is a reminder of the pressure employers are under.
“Nevertheless, the second half of 2025 showed some signs of a long run of negative data softening, and with placements falling at a slower pace than the 2025 average in December, there is some hope that we are seeing a December dip, rather than a change in the trend.”
He added, “Making this a better year for hiring will require a focus on building business confidence to invest. With the Budget behind us, the government needs to set out a clear path that firms can believe in, from the industrial strategy to pragmatic approaches on the Employment Rights Act, which is worrying many firms.”
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