UK employers increasingly rely on temporary staff as permanent hiring stalls, a shift highlighted by a KPMG/REC poll. The survey showed permanent placement index drop from 47.5 to 44.1 in May, while temporary billings climbed to 52.2, the strongest rise in three years. The trend mirrors a cautious market.

Chief executive Neil Carberry of the REC blamed the downturn on a loss of confidence amid the Iran war, which stalled economic recovery. Big recruiters like Hays report that temporary work now accounts for nearly two-thirds of global net fees, up from a decade‑old average, signalling a shift toward project‑based staffing.

Recruiters note that flexible placements lift net fees across sectors, but retail faces a sharp drop as new workers’ rights push firms to offer guaranteed hours. The KPMG/REC index shows weaker demand for both permanent and temporary roles, with retail seeing the steepest decline in vacancies, while healthcare remains the only sector with growing openings.

With cost pressures tightening, companies opt for temp contracts to avoid long‑term commitments. This shift reshapes the labour market, driving recruitment firms toward higher‑margin temporary work and forcing employers to reassess hiring strategies. Ultimately, the move signals a more uncertain economic climate and a need for businesses to balance flexibility with workforce stability today strategically.