UK employers significantly increased their use of temporary workers in June as businesses continued to delay permanent recruitment amid ongoing economic uncertainty, according to the latest KPMG and Recruitment and Employment Confederation (REC) UK Report on Jobs.
The monthly report, compiled by S&P Global from responses provided by around 400 UK recruitment consultancies, found that temporary billings grew at their fastest rate since April 2023, highlighting employers' preference for flexible staffing while confidence in the wider economy remains subdued.
Although permanent placements continued to decline, the pace of contraction eased noticeably compared with previous months, suggesting that hiring conditions may be beginning to stabilise after a prolonged slowdown.
Researchers said many employers remain cautious about making long-term hiring commitments while facing geopolitical uncertainty, rising operating costs and ongoing pressure on business confidence. Instead, organisations are increasingly using temporary and contract staff to deliver projects, manage fluctuating workloads and address immediate skills shortages without increasing permanent headcount.
The report also found that overall demand for workers continued to soften, driven primarily by a reduction in permanent vacancies. Temporary vacancies also declined, but at a much slower pace, reinforcing the growing importance of flexible recruitment in the current labour market.
At the same time, candidate availability continued to rise as redundancies and slower hiring activity encouraged more people to seek new employment opportunities. While labour supply increased for both permanent and temporary roles, recruiters noted that some workers were becoming more cautious about changing jobs because of uncertainty surrounding the economy.
Despite softer demand, competition for specialist talent continues to push pay upwards. Recruitment consultancies reported stronger growth in both permanent starting salaries and temporary pay rates during June as employers sought to attract candidates with in-demand skills. However, salary growth remains below historical averages.
Sector performance remained mixed. Demand for permanent staff increased in Nursing, Medical & Care and Engineering, while temporary vacancies also rose strongly in blue-collar occupations and engineering. Retail recorded the sharpest decline in demand for both permanent and temporary workers, reflecting continuing pressure on consumer-facing businesses.
Regionally, temporary billings increased across all monitored areas of England, with the strongest growth recorded in the South of England. Permanent hiring showed signs of improvement in London, the Midlands and the South, although recruitment remained weaker in the North of England.
Lisa Fernihough, Vice Chair Advisory at KPMG UK, said the figures reflected employers' desire to remain flexible while waiting for greater economic stability.
She said businesses were continuing to progress shorter-term projects through temporary recruitment rather than committing to permanent appointments, adding that many employers hoped improving economic conditions would allow recruitment activity to accelerate in the months ahead.
Neil Carberry, Chief Executive of the Recruitment and Employment Confederation, said the latest figures offered encouraging signs after a prolonged period of subdued recruitment activity.
He said temporary and contract work continued to lead the recovery as employers responded to immediate demand while remaining cautious about expanding their permanent workforce. Carberry added that businesses wanted greater certainty from government to support investment, growth and long-term job creation.
For employers, the report suggests flexible recruitment will remain an important workforce strategy while economic conditions remain uncertain. For jobseekers, the increase in temporary hiring may provide more opportunities to gain experience, develop new skills and build a pathway into permanent employment as business confidence gradually improves.
Sources
- KPMG UK
- Recruitment and Employment Confederation (REC)
- S&P Global Market Intelligence