Key facts
- The number of people seeking jobs in the UK has increased for 41 consecutive months.
- Available job vacancies have decreased for 22 consecutive months.
- Temporary job placements have seen a rise for the fourth consecutive month.
- Industry groups are urging the government to reduce employment regulations and associated costs.
- Businesses cite increased operational costs and recent employment law changes as reasons for slowing hiring.
The UK government is under pressure to simplify employment regulations as the number of individuals seeking jobs has steadily increased for nearly three and a half years, while the availability of positions has decreased for almost two years. Data from KPMG and the Recruitment and Employment Confederation (REC) indicates that unemployment currently stands at 4.9%, with forecasts suggesting a rise to 5.3% this year. This trend has led to an increase in temporary job placements for the fourth consecutive month, while permanent placements have stabilized.
REC’s chief membership and innovation officer, Maxine Bligh, noted that the rise in temporary job vacancies signals a potential revival in employer hiring plans. She urged the government to support this momentum by easing the costs and red tape associated with employment, particularly for young people entering the workforce.
Industry figures have directed criticism towards Sir Keir Starmer and Rachel Reeves, attributing the worsening employment situation partly to tax hikes, such as the increase in national insurance contributions for companies. These rising costs have prompted businesses to scale back hiring plans, with fewer than a quarter of firms expecting to expand their workforce in the coming months, according to the British Chambers of Commerce. Changes to employment law have also been cited as a complicating factor for businesses.
Despite these challenges, the KPMG report highlighted that firms are increasing pay packages for new hires, with starting salaries seeing their fastest growth in six months, particularly in London. New public procurement rules are also set to incentivize employers to offer pay rates above the national minimum wage.