Permanent hiring is declining
There’s a quiet shift happening in the UK hiring market right now –
and if you’re responsible for building or managing a team, you’ve probably felt it.
Written by: Natalie Elliott
Assistant Marketing Manager
If you’re feeling hesitant about hiring permanently right now, you’re not alone…
Recent data shows a clear trend:
Employers are becoming more cautious about long term commitments
This isn’t a coincidence – it’s a response to a business environment that feels increasingly unpredictable.
Why businesses are pulling back on permanent hiring
1: Rising Costs Are Changing the Hiring Equation
Since 2025, employers have faced significant increases in staffing costs.
Some of those increases include:
- Employers National Insurance (NI) rate rising from 13.8% to 15%
- The earnings threshold at which employers start paying NI reduced from £9,100 to £5,000
- The National Living wage saw a 4.1% increase in April 2026, as well as the Minimum wage for 18-20yrs rising by 8.5%
- From April 2026 Statutory Sick Pay (SSP) became a day one right, meaning that SSP is now payable from the first day of absence, rather than the fourth
Which means every new permanent hire represents a much bigger financial commitment than it did just a few years ago.
For some businesses, this has resulted in a more cautious approach to recruitment, with employers delaying hiring decisions, leaving vacancies unfilled for longer, or exploring temporary staffing solutions that provide greater flexibility while managing costs.
2: Economic Uncertainty Is Driving Caution
Economic uncertainty continues to weigh heavily on hiring decisions.
The latest KPMG and REC Report on Jobs found that permanent placements have been declining as businesses adopt a cautious approach to recruitment due to concerns surrounding future business performance, with many employers putting growth plans on hold until there is greater confidence in the economy.
This trend is also reflected in wider labour market data. UK payrolled employment has been falling, with HMRC and ONS figures showing fewer people on payrolls compared to previous years. The data points to a softer labour market, where businesses are focusing on retaining existing staff and controlling costs rather than expanding headcount.
3: More Red Tape
Hiring isn’t just becoming more expensive, it’s becoming more complex, as employers are navigating an increasing number of compliance requirements, and evolving employment legislation and workplace obligations.
The introduction of the Fair Work Agency and broader employment reforms are expected to place even greater emphasis on compliance, record-keeping, and employee rights. For HR and hiring managers, this means more administration, more processes, and more time spent ensuring policies remain compliant.
Recent labour market research has shown why enforcement remains a priority. The Resolution Foundation found that:
- 2 million jobs come without any annual leave entitlement
- 4 million workers do not receive a payslip
- 445,000 jobs are paid below the National Minimum Wage
These figures highlight the scale of compliance challenges that still exist across the UK labour market and explain why policymakers are increasing scrutiny and enforcement.
For businesses already balancing cost pressures and economic uncertainty, the growing compliance burden adds another layer of complexity to permanent recruitment decisions.
When comparing our service to recruiting for the role(s) yourself, would you agree that we are more cost effective?
Why temporary staffing is becoming the smart alternative
1: Flexibility When You Need It Most
Scale your workforce up or down as demand changes. Whether you’re covering holidays, sickness, seasonal peaks, or unexpected increases in workload, temporary staff give you the flexibility to respond quickly without long-term commitments.
2: Better Cash Flow, Lower Fixed Costs
Temporary staffing allows you to access the people you need without increasing your permanent headcount.
This helps reduce fixed employment costs and can make workforce planning more manageable during periods of uncertainty or fluctuating demand.
3: Speed Without Compromise
Need support quickly? Temporary workers can often be sourced and deployed much faster than permanent hires, helping you maintain productivity and keep operations running smoothly when time is critical.
4: Reduced Risk & Admin
Recruitment, referencing, compliance checks, payroll, holiday pay, and other employment administration can all take up valuable time. Temporary staffing can help reduce that burden, allowing your team to focus on running the business.
5: “Try Before You Hire” Still Exists
Temp-to-perm arrangements give both employer and employee the chance to make sure the role is the right fit.
Candidates can demonstrate their skills in a real working environment, while businesses can assess performance, attitude, and team fit before making a permanent offer.
So, is temporary staffing the right move for you? If you’re…
Hesitating over permanent hires
Feeling pressure from rising costs
Unsure what the next 6-12 months look like
Then temporary staffing isn’t just an alternative.
It might be the most strategic decision you can make right now.
Get in touch to find out how flexible staffing can support your business:
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