UK firms now prefer temp workers over permanent hires, survey finds
LONDON, UNITED KINGDOM — British employers have shifted decisively toward temporary staffing over permanent hiring, with demand for temporary workers reaching a three-year high in May 2026, according to the monthly Report on Jobs published jointly by KPMG and the Recruitment and Employment Confederation.
Hiring freezes push employers toward ‘defensive staffing’
“Employers are still reluctant to commit to permanent hiring, with tighter budgets and hiring freezes continuing to weigh on longer-term recruitment decisions,” said David Williams, Senior Partner at KPMG UK.
The report, based on surveys of approximately 400 UK recruitment consultancies, found that temporary billings rose to their strongest reading since April 2023, while permanent placements fell to a May index reading of 44.1 — below the 50.0 neutral mark that separates growth from contraction.
The shift reflects what recruitment professionals describe as “defensive staffing” — a strategy in which employers reduce overall hiring volume and substitute temporary arrangements for permanent roles when filling skills gaps.
Rising employment costs accelerate the structural shift
“The jobs market continues to be restrained by uncertainty, with firms hesitant to commit to permanent hiring,” said Neil Carberry, Chief Executive of the REC.
Permanent placement indices fell from 47.5 in April to 44.1 in May, deepening a trend that has held across most of 2026.
Temporary billings rose from 50.4 to 52.2 over the same period — the strongest reading for temporary demand in more than three years.
Employers cited rising employment costs including National Insurance contribution increases, weak business confidence, and anticipated regulatory changes under the Employment Rights Bill — including proposed guaranteed working hours requirements — as the primary factors driving the shift away from permanent hires.
The combined effect is a UK labor market in which flexibility has become the dominant hiring strategy: companies are managing cost risk through workforce structure rather than productivity gains.
For BPO providers, the UK’s defensive staffing trend is a direct commercial signal. British companies reducing permanent headcount while expanding flexible workforce arrangements are structurally more open to outsourcing — which delivers the same headcount flexibility without the domestic employer cost liabilities that now make permanent UK hiring expensive.
As the Employment Rights Bill advances and employer NI obligations increase, offshore staffing offers UK clients the ability to scale operations without adding to a permanent cost base that regulators are making progressively harder to reduce.
