Is this the UK jobs recovery? Permanent hiring crashed to 47.5 in April per KPMG-REC — down from 49.2 in March — while temporary placements surged to a 2.5-year high. The UK labour market isn’t recovering; it’s casualising. ITEM Club forecasts 163,000 net UK job losses through 2026, with London alone shedding 25,000 positions. The employer NICs hike keeps doing exactly what it was warned it would.
The 47.5 number that ends the recovery talk
KPMG and the REC published their monthly permanent placements index at 47.5 in April, down from 49.2 in March. Sub-50 means contraction. April was the steepest monthly decline since January and the third straight month of negative readings.
The researchers’ explanation: businesses deferred recruitment in the face of rising cost pressures and geopolitical uncertainty, with the Iran conflict cited as the trigger for the worsening April print.
Jon Holt, group chief executive and UK senior partner at KPMG, said the small signs of recovery seen earlier in the year had been disrupted by the Iran conflict. He said: “Hiring decisions are being deferred, with the rise in temporary recruitment pointing to chief execs taking a more flexible approach to workforce planning.”
That single quote tells you everything about how UK office leaders are reading 2026. Permanent commitments are paused; flexible bench-warmers fill the gaps.
The temp surge tells the real story
The bright spot in the data is a darker story dressed up. Temporary billings hit 50.4 in April — the first expansion in three months and the strongest reading in two and a half years.
The straightforward reading: employers are still demanding labour. They are just refusing to commit to it on a permanent basis. The same workforce, the same workload, on worse contracts. Casualisation is the polite word for it.
The shift is broader than one month’s data. The staff availability index hit 61.0 in April — driven explicitly by redundancies and weaker demand, per the researchers. The pool of jobseekers grew while permanent vacancies dried up. Temp roles became the only flexible match.
For UK office workers losing permanent contracts and re-entering the market as temps, the headline “labour market improving” reading is upside-down. The number of jobs rises; the quality of contracts drops.
What’s actually driving it
Iran is part of the answer; cost pressure is the rest. The employer NICs hike from Reeves’ October 2024 Budget has now had 19 months to filter through to hiring decisions. Researchers also flagged that starting salary inflation has accelerated, intensifying the wage-cost equation that triggered the NICs response in the first place.
Neil Carberry, chief executive of the REC, warned that businesses are particularly concerned about the combined impact on inflation, borrowing costs, and supply chain disruption. He called on the government to drop its planned guaranteed hours rules from the Employment Rights Act — the policy that would lock employers into minimum-hour commitments for workers, exactly the opposite direction April’s temp-surge data is pulling.
The decline in vacancies was more pronounced for the private sector than the public sector. London and northern England bucked the national trend with a permanent placements reading of 54.9 — but the rest of the country dragged the headline number deep into contraction territory.
What 2026 looks like from here
The data is moving in opposite directions on different time horizons — which is exactly the signal you would expect during a sharp restructuring of the labour market.
The official numbers compound the picture. ONS data shows UK total vacancies fell to 711,000 in Q1 — the lowest level in nearly five years, down 29,000 or 3.9% on the quarter.
Looking ahead, the ITEM Club projects a net loss of 163,000 UK jobs through 2026. The biggest absolute drop is forecast in London — an estimated 25,000 positions disappearing — as retail and hospitality sectors slow under pressure from the consumer-spending squeeze. April’s London index of 54.9 looks resilient on a monthly basis, but the ITEM Club’s annual call says the capital ends 2026 as the single worst-performing UK region for jobs.
That asymmetry is the structural problem. London leads on the monthly print; London leads on the annual decline. The data is moving in opposite directions on different time horizons — which is exactly the signal you would expect during a sharp restructuring of the labour market.
For UK office workers, the practical read is sharp. A permanent role lost in April is unlikely to be replaced by a permanent role in May or June — it gets replaced by a six-month temp contract, an interim placement, or a freelance gig with no employer NICs liability attached.
The cost burden the NICs hike was supposed to put on employers is now being routed straight back to the worker via shorter, flexible contracts.
The Bottom Line
Don’t read the temp surge as good news. UK employers are shifting workers from permanent to flexible because permanent jobs are too expensive — the NICs hike, the Iran fallout, the rising cost base all point one direction. If you’re a permanent hire today, expect to be a temp by 2027. Watch the May KPMG-REC print: a drop below 47.5 confirms the casualisation is structural, not cyclical.
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FAQ
What is the KPMG-REC permanent placements index?
The Recruitment and Employment Confederation and KPMG publish a monthly index tracking UK permanent job placements — readings above 50 mean expansion, below 50 mean contraction. April’s 47.5 was the steepest decline since January and the third straight month of contraction.
Why did temporary billings surge while permanent hiring crashed?
KPMG’s Jon Holt tied the divergence to businesses deferring permanent hires while turning to flexible staffing for short-term needs. Temporary billings hit 50.4 — the first expansion in three months and the strongest reading in two and a half years — while permanent placements continued to fall.
What does the ITEM Club forecast mean for UK employment?
The ITEM Club projects a net loss of 163,000 UK jobs through 2026, with London bearing the largest absolute decline at an estimated 25,000 positions. Retail and hospitality are expected to drive the London drop as consumer demand softens through the year.
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