temporary work is making up the gap
Across Britain, a quiet but telling shift is underway in how companies build their workforces — not through mass layoffs, but through a gradual retreat from permanence. Faced with rising costs, geopolitical unease, and domestic uncertainty, employers are choosing flexibility over commitment, filling roles with temporary workers while deferring the longer promise of stable employment. It is a rational response to an irrational moment, yet its human cost falls unevenly — landing hardest on the young, the entry-level, and those who most need a foothold in working life.
- Permanent hiring in the UK fell at its fastest rate in ten months in May, as businesses spooked by Middle East conflict, political turbulence, and climbing costs chose short-term contracts over long-term commitment.
- A surge in temporary job offers masks a deeper fragility — redundancies are rising, job openings are thinning, and a flood of anxious candidates is eroding workers' ability to negotiate better pay.
- The damage is concentrated: retail is shedding permanent positions faster than any other sector, while over a million young people are now neither working nor studying — the highest figure in more than a decade.
- Healthcare remains a rare exception, still expanding its permanent workforce, while most other industries either delay hiring plans or abandon them altogether as uncertainty compounds.
- Business leaders and researchers are sounding alarms, warning that the collapse of entry-level opportunities is quietly reshaping a generation's relationship with the labour market.
British companies are pulling back from permanent hiring — not all at once, but with a pattern clear enough to name. In May, temporary job openings rose noticeably while permanent recruitment fell at its fastest pace in ten months, according to a survey of 400 UK recruitment firms by KPMG and the Recruitment and Employment Confederation. The cause, researchers say, is a confluence of pressures: geopolitical instability, domestic political turbulence, and operating costs that keep climbing. When the near future feels uncertain, committing to a permanent employee feels like a bet few employers are willing to make.
The human consequences are already visible. Redundancies have risen, job openings have narrowed, and a growing pool of anxious candidates has weakened workers' negotiating power — particularly at the entry level, where wage growth has barely moved. The official unemployment rate climbed unexpectedly to five percent in the first quarter of the year, and a government-backed study found more than a million young people neither working nor studying, the highest figure in over a decade.
The pain is not evenly shared. Healthcare and care sectors continue to hire permanently and grow their rosters. Retail has been hit hardest, shedding permanent positions faster than any other tracked industry. Business leaders including Next's Simon Wolfson have warned that the collapse of entry-level roles is directly driving youth unemployment higher. For many companies, temporary contracts have become a way to keep work moving without making promises. For many young people, the door into stable employment is quietly closing.
British companies are pulling back. Not dramatically, not all at once, but with a visible shift in how they're building their workforces. In May, the number of temporary job openings jumped noticeably, while permanent hiring fell at its fastest pace in ten months. The pattern is clear enough that researchers at KPMG and the Recruitment and Employment Confederation, who surveyed 400 UK recruitment firms in mid-May, felt confident naming the cause: businesses are spooked.
The spooking comes from multiple directions. Political turbulence at home, the ongoing conflict in the Middle East, and the simple fact that operating costs keep climbing—all of it has made company leaders hesitant to commit to permanent staff. When you don't know what next quarter looks like, hiring someone for the long term feels riskier than bringing in workers on fixed contracts. Neil Carberry, who runs the REC, put it plainly: with businesses tightening their belts against higher expenses, geopolitical instability, and new employment regulations, temporary work has become the gap-filler. It's the way companies can get work done without betting the farm.
The human side of this shift is already visible. Redundancies have climbed. Job openings have thinned. People worried about their security have flooded the recruitment market, looking for anything available. That flood of candidates, combined with employers' reluctance to hire and their shrinking budgets, has meant that wages for entry-level workers and temporary staff have barely budged. In May, salary growth for these groups was modest at best compared to the month before—a sign that desperation and supply are working against workers' negotiating power.
The damage isn't evenly distributed. Healthcare, nursing, and care sectors are still hiring permanently, still growing their rosters. Retail has been hit hardest, shedding permanent positions faster than any other tracked industry. Across the broader economy, the official unemployment rate climbed unexpectedly to 5 percent in the three months ending in March. Wage growth has slowed. And a government-backed study recently found that more than a million young people are neither working nor studying—the highest number in over a decade. That's not a statistic; that's a generation watching the entry-level job market collapse.
Retailers and other business leaders have started sounding alarms. Simon Wolfson, who runs Next, has warned that a sharp drop in entry-level positions is driving youth unemployment higher. Jon Holt of KPMG echoed the broader anxiety: global and domestic uncertainty is making employers cautious, and that caution is showing up in hiring decisions. Some companies are using temporary contracts to keep flexibility. Many others are simply postponing permanent hiring plans or shelving them altogether. The jobs market, in other words, is fragile—and it's getting more so as businesses wait to see what happens next.
Citas Notables
With businesses tapping the brakes on permanent hiring in the face of higher costs, the Gulf crisis and new employment red tape, temporary work is making up the gap.— Neil Carberry, chief executive of the Recruitment and Employment Confederation
Ongoing global and domestic uncertainty is making businesses more cautious and that is increasingly reflected in hiring decisions.— Jon Holt, KPMG
La Conversación del Hearth Otra perspectiva de la historia
Why temporary over permanent? It seems like a small distinction, but you're suggesting it's actually quite significant.
It's about control and risk. When a company hires someone permanently, they're making a bet on the future. They're saying, "We believe we'll need this person next year, and the year after." Temporary contracts let you say, "We need help right now, but we're not sure about later."
And that uncertainty is coming from where, exactly?
Multiple places at once. The Middle East conflict is disrupting supply chains and investor confidence. There's political instability domestically. And costs are rising—energy, wages, everything. So a business leader looks at all that and thinks: why lock in a permanent salary if I might need to cut headcount in six months?
But doesn't that create a problem for workers?
Absolutely. If most jobs being created are temporary, then workers have no stability, no benefits, no sense of building a career. And if you're young, trying to get your first job, you're competing against a flood of other people in the same boat. Wages don't move because there's always someone else willing to take the temporary gig.
The healthcare sector is still hiring permanently. Why is that different?
Healthcare has structural demand that doesn't disappear in a recession. People still need nurses, doctors, care workers. Retail, by contrast, is discretionary. When people tighten their belts, they shop less. So retailers hire fewer people, and they do it cautiously.
What happens if this continues?
You get a two-tier workforce. Some people in stable, permanent roles with benefits and security. Others cycling through temporary contracts, never quite building anything. And a generation of young people who never get the chance to establish themselves in the first place.