New report says UK companies are hiring more temp workers and at higher rates

UK recruitment consultancies are reporting that clients are making more temporary hires over permanent ones amid lingering economic uncertainty, according to a new study.

Temp billings for recruiters were recorded as the fastest growing for seven months, according to the KPMG and REC, UK Report on Jobs survey.

Permanent placements, however, fell for the seventh month in a row and at the quickest rate since the start of 2021, according to S&P Global, which compiled the survey findings.

The survey analysis showed that UK hiring companies are looking to hire more short-term staff which has pushed up temp billings growth to a seven-month high, while permanent staff appointments contracted at the fastest pace in over two years.

Rates of starting pay for both permanent and temporary workers strengthened. Efforts to attract and secure suitably-skilled staff and higher living costs were cited as key drivers of pay growth. Vacancy trends likewise diverged, with a softer rise in permanent staff demand contrasting with a sharper increase in temp positions.

Data broken down by English region showed the steepest increase in temp billings in the South of England. The Midlands bucked the wider trend and was the only area to register a reduction.

Nursing/Medical/Care topped the temporary staff demand league table at the start of the second quarter, followed by Hotel & Catering and Engineering. The only monitored sector to see reduced demand for short-term staff was Retail.

Not all temp recruitment sectors are booming though. “The picture varies for temporary recruitment too, with REC members reporting weaker demand in some sectors than others as sectors like logistics, driving and food are heavily affected by changing consumer behaviour,” said Neil Carberry, REC Chief Executive.

Carberry despite this remains positive. “Taken together, however, there is still plenty of opportunity out there for jobseekers. Wages are rising strongly for both temps and new permanent hires in the face of inflation, even though candidate availability is finally starting to improve,” he said.

Claire Warnes, Partner, Skills and Productivity at KPMG UK, said: businesses remain cautious about committing to permanent hires in the face of ongoing economic uncertainty, which led to the quickest increase in temporary billings for seven months.

“Recruitment freezes and candidates lacking the right skills were also cited as causing this divergence, with permanent staff appointments contracting at the fastest rate in two years,” said Warnes.