10th August 2026
Britain's jobs market may finally be showing signs of emerging from its long recruitment downturn, but the latest KPMG and REC survey reveals an important change in employer behaviour. Companies are hiring, but they are increasingly choosing flexibility over permanent commitments.
The latest KPMG and REC UK Report on Jobs, covering June 2026, found that temporary recruitment activity increased at its fastest rate for more than three years. Temporary billings rose at their strongest pace since April 2023, suggesting businesses are once again taking on workers to meet immediate demands.
That is encouraging news. However, permanent recruitment remains weak.
The number of people placed into permanent jobs continued to fall, although the decline was only marginal and was considerably weaker than in previous months. This suggests the permanent jobs market may be approaching stabilisation rather than continuing its earlier deterioration.
Businesses are still nervous
The reason for the difference between temporary and permanent hiring appears to be uncertainty.
Businesses facing uncertain demand, higher costs and continuing geopolitical risks can take on temporary or contract workers without making the longer-term financial commitment involved in permanent employment.
It is effectively a "wait and see" approach.
The survey also found that overall demand for workers continued to decline, reaching its fastest rate of reduction since January. At the same time, the number of candidates available for jobs continued to rise, partly because of redundancies and reduced recruitment.
For workers, that creates a difficult combination: there may be more jobs beginning to appear, but there are also more people competing for them.
Pay provides a more positive signal
There was nevertheless some good news on wages.
Starting salaries for permanent employees and pay rates for temporary workers both increased more quickly in June. Employers are still prepared to pay more for people with skills they particularly need.
However, wage growth remains below the long-term average, indicating that the labour market is still some distance from returning to the tight conditions seen before the recent economic slowdown.
Engineering and care stand out
Not every part of the economy is behaving in the same way.
Nursing, medical and care occupations, together with engineering, were the only monitored sectors to record an increase in demand for permanent staff.
Engineering also experienced strong demand for temporary workers.
Retail was at the opposite end of the scale, recording the sharpest reduction in permanent vacancies.
That difference may tell us something important about the future UK economy. Demand is increasingly concentrated in sectors where businesses have genuine skills shortages or where investment and infrastructure projects require workers, while more consumer-facing industries remain under pressure.
A jobs recovery — but not yet a confidence recovery
The KPMG/REC figures therefore provide a cautiously positive message.
The worst of the decline in permanent recruitment may be passing. Temporary employment is already showing much stronger growth, and pay is beginning to pick up.
But employers have not yet regained sufficient confidence to return to widespread permanent hiring.
Britain's labour market is consequently entering an unusual phase: businesses are prepared to hire, but they want to keep their options open.
That could change if economic growth strengthens and uncertainty falls. But until businesses become confident enough to invest for the longer term, the temporary jobs boom may continue to run ahead of the permanent employment market.
For the UK economy, that makes the next few months particularly important. A genuine recovery will ultimately need to show itself not just through more temporary work, but through businesses once again being willing to take on permanent employees and invest in their future.
Read the KPMG report HERE