Temp jobs boom as bosses halt hiring freeze

Temp jobs boom as bosses halt hiring freeze

After nearly two years of bad news, Britain's jobs market may finally be turning a corner. Temporary hiring is gathering pace, wages are picking up and employers are slowing the relentless cuts to permanent recruitment. It is far from a full recovery, but for millions of jobseekers it offers a welcome glimmer of hope.

The latest recruitment figures suggest businesses are becoming a little more confident, even if they remain cautious about taking on permanent staff. For small firms, the rise in temporary work offers much-needed flexibility at a time when higher employment costs and economic uncertainty continue to make long-term hiring a difficult gamble.

RAYS OF HOPE FOR JOBSEEKERS?

Pay picks up and temp work surges. Bosses finally stop the job‑cutting spree

The UK’s bruised jobs market is showing its first signs of life in months, with pay rising, temporary roles booming. Employers are also applying the brakes on permanent job cuts.

A new report from KPMG and the Recruitment & Employment Confederation reveals a turnaround that could spell good news for jobhunters who’ve endured nearly two years of gloom. On the other hand, the same report shows the pool of people looking for jobs in the UK grew for a 41st consecutive month according to the same data.

Official figures show the unemployment rate is 4.9 per cent, economists are forecasting that to rise, and vacancies have mostly fallen over the last four years. The boom in temp work may have left jobseekers with little choice but to take up short-term roles. Temporary placements rose for the fourth month in a row, and the government is facing calls to strip red tape around employment which would suggest employers would rather be in a position to employ permanent people.

Temp Work

Temporary roles jumped at the fastest pace since early 2023. Some bosses are clearly still wary of taking on people permanently, possible because of the Employment Rights reforms still bedding in, because of the costs involved in recruiting permanent people, and the worry about whether the business will thrive in the longer term. Flexibility may be the key consideration as they navigate political jitters, rising costs and economic uncertainty.

Permanent Jobs

After 45 months of decline, permanent placements have finally stabilised. Recruiters say many firms are still cautious, but new projects are nudging some employers back into hiring mode.

Pay Rises

Wages are heading in the right direction with starting salaries hitting their highest level in six months. A shortage of skilled workers is pushing pay up, which will make it hard for small businesses to compete. It’s not a return to the boom years. Salary growth is still below long‑term trends, but after months of stagnation, it’s a welcome lift for workers feeling the pinch.

Small and micro businesses

A more stable labour market could reduce immediate pressure on small employers because of fewer staff departures and slightly easier recruitment conditions. For small firms that have struggled with turnover and skills shortages, this is a welcome shift.

Flexibility

Temporary work is rising fastest and this is particularly helpful for small and micro businesses because small firms often cannot commit to full‑time hires when cashflow is tight and costs are rising. The broader labour market’s pivot towards temp work gives small businesses access to talent without long‑term cost commitments and a way to scale up or down quickly. This flexibility is crucial at a time when many businesses are still facing rising employment costs, weak demand and high insolvency rates.

Pay growth is a double‑edged sword

Higher wages may help attract better candidates and improved worker confidence can boost consumer spending, but higher wage expectations add cost pressure and NIC increases and rising labour costs hit small firms hardest. Sectors like retail, hospitality and care, dominated by micro‑businesses, face the steepest affordability challenges. Small businesses are already absorbing higher employer NICs and rising operating costs, so wage inflation, even modest, can be difficult to manage.

Cautious optimism

The figures don’t show a full‑blown recovery but for people who have been desperately frustrated by the lack of opportunity in the jobs market, even though it’s in temp roles, this could be the first sign that the tide may be turning.

The “signs of life” in the jobs market may also give small and micro businesses a bit of breathing space, but they don’t remove the structural pressures they face such as low resilience and high exposure to shocks.