LONDON – British employers are relying more heavily on temporary workers, a closely watched survey shows, as they adapt to economic turbulence from the war in the Middle East.
Hiring for permanent roles fell at the fastest pace for three months in April, extending a downturn that began in 2022, according to the Recruitment and Employment Confederation. Employers cited rising cost pressures and weak sentiment, worsened by the Iran war. Pay growth remained muted, while layoffs and delayed hiring decisions pushed up the number of job-seekers.
Still, firms added more short-term workers for the first time since January, seemingly as a way of navigating the volatile economic backdrop. Although the rise was modest, it marked the fastest pace of growth in two and a half years.
Bank of England rate-setters are facing a difficult balancing act as they weigh the economy’s fragile demand against rising inflation from the Iran energy shock. The BOE has so far kept interest rates in hold, but officials have signalled they stand ready to act to rein in price pressures.
The report will provide some reassurance to policymakers worried about the possibility of a rapidly unwinding jobs market. Jon Holt, group chief executive and UK senior partner at KPMG, said the flexibility provided by temporary workers “may help avoid a deeper downturn in the labor market and support growth plans, even as they brace for further economic headwinds.”
BOE policymakers are focusing on wage growth for signs of inflationary pressures coming down the line. The REC’s pay indicator points to a steady picture, suggesting the energy shock isn’t fueling a wage-price spiral yet. Recruiters said pay growth picked up in April but remained below the survey average, reflecting tighter budgets and subdued demand for staff.
The findings align with the BOE’s own survey of firms in April, which suggested the Middle East conflict has yet to feed through into pay. However, it warned the energy price shock could become a bigger factor in wage negotiations later this year and into 2027. BLOOMBERG
