Britain's labour market weakened sharply in May as employers scaled back permanent recruitment, citing growing uncertainty and rising costs linked to the conflict involving Iran, according to
a survey released on Monday.
The latest Report on Jobs from KPMG and the Recruitment and Employment Confederation (REC) showed that permanent staff placements fell at their fastest rate since July 2025. The decline marks the 44th consecutive month of falling permanent placements — the longest downturn recorded since the survey began in 1997.
Businesses are becoming increasingly cautious as geopolitical tensions and domestic economic challenges cloud the outlook. Many firms are postponing long-term hiring decisions while seeking greater flexibility in workforce planning.
"Ongoing global and domestic uncertainty is making businesses more cautious, and that is increasingly reflected in hiring decisions," said Jon Holt, Group Chief Executive of KPMG. "While some employers are turning to temporary contracts to retain flexibility, many permanent hiring plans are being delayed or put on hold."
The survey highlighted a clear shift toward short-term recruitment. The index measuring temporary staff placements rose to 52.2 in May from 50.4 in April, marking the strongest growth in temporary hiring since April 2023 as employers opted for flexible staffing arrangements amid heightened uncertainty.
At the same time, the availability of candidates for both permanent and temporary positions increased at a faster pace than in the previous month, suggesting a growing pool of job seekers.
Demand for workers, however, continued to weaken. Overall vacancies fell at the sharpest pace since February, driven largely by a steeper decline in openings for permanent roles.
The findings are based on responses from approximately 400 recruitment agencies surveyed between May 12 and May 22.
The latest data points to a labour market increasingly affected by geopolitical risks and economic pressures, with employers favouring caution over expansion as uncertainty persists. Photo by Phil Whitehouse, Wikimedia commons.
