UK companies are increasingly opting for temporary workers over permanent staff due to low economic confidence and rising costs, according to a report from KPMG and the Recruitment and Employment Confederation (REC). Recruiters noted a strong increase in temporary roles in May, while permanent recruitment saw its sharpest decline in ten months.
The report attributes the trend to political turbulence in the UK, the ongoing Middle East conflict, and higher business costs, which have made employers cautious about expanding their permanent workforce. Neil Carberry, chief executive of REC, said: “With businesses tapping the brakes on permanent hiring in the face of higher costs, the Gulf crisis and new employment red tape, temporary work is making up the gap.”
Redundancies, fewer job opportunities, and concerns over job security have increased the number of candidates applying for roles, according to the survey of 400 UK recruitment firms. However, lower demand and tighter budgets meant salary growth for new entrants and temporary workers was modest in May compared to the previous month.
The nursing, medical, and care sector was the only area to register higher demand for permanent staff, while retail saw the steepest drop. Official figures show the unemployment rate rose unexpectedly to 5% in the three months to March, and wage growth has slowed. A recent government-backed report also warned that the number of young people not in work or education has exceeded one million for the first time in over a decade.
Jon Holt of KPMG commented: “Ongoing global and domestic uncertainty is making businesses more cautious and that is increasingly reflected in hiring decisions. While some employers are turning to temporary contracts to retain flexibility, many permanent hiring plans are being delayed or put on hold.”
