Hiring fell again in March in the UK as budget constraints and reduced business activity continued to weaken employer confidence.
The confluence of redundancies and fewer job openings led to a sharp increase in candidate availability in March – the highest rate of growth in more than four years, according to the UK Report on Jobs from KPMG and the Recruitment and Employment Confederation (REC).
“Near-term prospects” are uncertain as businesses respond to economic pressures from the UK government’s tax increases and global uncertainty following the US government’s imposition of tariffs, Neil Carberry, the REC’s chief executive, said in the report.
The monthly report’s main hiring measure, the Permanent Placements Index, remained below the neutral level of 50 at 43.4 in March, a slight decline from February’s 43.6 but well above January’s 39.8. Indices with a reading above 50 indicate an overall increase and below 50 an overall decrease compared with the previous month.
The drop in permanent placements was attributed to fewer job opportunities and lower levels of confidence in the economy, the report said.
The report paints a mixed picture for temporary workers. The rate of contraction for temporary positions declined for ninth successive month, but at the softest rate this year.
According to the report, lower demand for temporary staff comes as companies report reduced client activity and tighter recruitment budgets.
Redundancies and low demand induced a steep increase in availability across permanent and temporary workers. The report’s seasonally adjusted Total Staff Availability Index rose from 59.2 in February to 63.0 in March — the most pronounced upturn since December 2020.
As global factors pause hiring for business leaders, Jon Holt, Group CEO and senior partner at KPMG UK, advised organisations to redouble employee engagement programmes to maintain morale for existing employees.
Economic pressures also continue to affect pay growth. While the increase in starting salaries was the highest in seven months, the rise was weaker than the report’s historical average. The Permanent Salaries Index rose from 52.1 in February to 53.3 in March.
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