Hiring activity across the UK declined again in March as employers continued to scale back recruitment in response to economic uncertainty and tighter budgets, according to new data.
The latest UK Report on Jobs, from professional services network KPMG and the Recruitment and Employment Confederation (REC), recorded further reductions in both permanent placements and temporary billings.
March marked the 30th consecutive month of decline in permanent hires, with recruiters attributing the trend to reduced client activity and cautious hiring strategies. Temporary billings also fell, although the rate of decline slowed to its softest in three months. Vacancies across both permanent and temporary roles continued to decrease, although at a slightly slower rate than in previous months.
The availability of workers rose at the sharpest pace since December 2020. Consultants cited redundancies and reduced hiring opportunities as key reasons for the increase in candidate supply. Both permanent and temporary labour availability grew, with the former experiencing the quicker rate of expansion.
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Starting salaries and temp wages increased modestly, but pay pressures remained historically subdued. While some employers offered higher salaries to attract candidates with the right skills, most were constrained by tighter recruitment budgets and increased candidate availability.
Regional hiring trends and sector performance
Across the English regions, three out of four saw permanent placements decline, with the steepest fall reported in the North of England. London was the exception, with a modest increase in permanent hiring. Temporary billings dropped in all four regions, led again by the North.
Demand for permanent staff fell across all ten monitored sectors. Retail experienced the steepest decline in vacancies, followed by secretarial and clerical roles and executive and professional positions. The construction sector saw the smallest reduction. Temporary demand followed a similar trend, with engineering reporting the most stable conditions and only a marginal decrease.
Jon Holt, Group Chief Executive and UK Senior Partner at KPMG, said the data reflects continued economic pressure, with businesses managing rising employment costs alongside global uncertainty.
He added, “While the rate of pay inflation has improved from last month’s four-year low, growth in starting salaries remains below the historic average. Recent global events have put pressure on any growth prospects in the UK, so it is unlikely that we will see an improvement in the data in the near term.”
Outlook remains uncertain as costs weigh on employers
Despite some signs of stabilisation, the labour market continues to face significant challenges. Panellists reported that many employers remain cautious, with cost management taking priority over expansion. While some hiring activity persists, particularly in London, the overall sentiment remains subdued.
Neil Carberry, Chief Executive of the REC, said that March showed early signs of possible progress, particularly with a slight rise in permanent hiring in London and a slower fall in temporary billings nationally. Carberry also noted the wider context affecting employer sentiment.
“Given the substantial effects of the Government’s decision to increase payroll taxes hugely, these figures were if anything slightly better than expected and suggest that there is potential in the market,” he said.
“A cyclical hiring upturn was always likely in 2025, but the near-term prospects for this have been made all the more uncertain by the actions of the US Government in upending the global trade system.”
Carberry called for policy clarity and support for businesses across sectors as the scale of rising costs becomes clear following rise in National Insurance.
“The faster we have clarity on how the industrial strategy will support all sectors the more likely employer sentiment on hiring and investing will remain stable,” he added.
