As we move further into 2026, the latest KPMG and REC Report on Jobs suggests the UK labour market is beginning to stabilise after a prolonged period of slowdown. March data indicates recruitment activity came close to stabilising at the end of the first quarter, which is an encouraging shift after much of the past three years being defined by declining hiring activity.
That said, confidence remains cautious. Rising business costs, including increases in the National Minimum Wage, higher operating costs and wider geopolitical uncertainty, continue to influence recruitment decisions. For many employers, hiring is still happening – but it is more measured, more selective and often focused on critical business needs rather than growth.
๐ Hiring Activity Is Showing Signs of Stability
March brought some welcome signs that the pace of decline in hiring is easing.
Permanent recruitment across the UK remained slightly down overall, but the rate of decline was marginal and unchanged from February – making it one of the most stable periods seen in the past three years.
Temporary and contract recruitment also remained subdued, but the pace of decline softened compared with the previous month. This reflects the continued balancing act many employers are managing: remaining cautious while still needing to secure key talent where business needs demand it.
For the HR market, this mirrors what many organisations are experiencing:
- recruitment is still moving, but decision-making is slower
- replacement hiring continues to outweigh growth hiring
- approval processes remain more detailed and budget-sensitive
There were also reports within the survey that some businesses had started to lift hiring freezes to support growth plans, which is an encouraging sign for the months ahead.
๐ Regional Picture Remains Mixed
March highlighted a varied regional market.
London saw some welcome improvement in permanent hiring during March, marking its first month of growth in a year. This suggests some employers in the capital are beginning to move forward again, particularly in business-critical and strategic roles.
However, Londonโs temporary market remained more subdued, reflecting continued caution around interim projects and short-term spend.
Across the South of England, the market remained more restrained. Permanent hiring slowed further in March, while temporary recruitment also remained slightly down overall.
This suggests many employers across the South are still taking a cautious approach to longer-term hiring decisions, particularly where economic uncertainty and rising costs are impacting budgets.
๐ฅ Candidate Availability Has Increased Significantly
One of the clearest trends in March was the continued increase in candidate availability.
The latest survey highlighted that the current stretch of rising labour supply has now lasted 37 consecutive months – the longest period recorded since the KPMG and REC survey began in 1997.
This reflects:
- redundancies in some sectors
- slower vacancy growth
- employers restructuring and streamlining teams
- fewer new opportunities coming to market
For employers, this means there is generally a broader talent pool available than there has been for some time.
However, more available candidates does not automatically mean easier hiring.
In HR recruitment particularly, organisations are still looking for candidates who can bring immediate value, work at pace and manage complex people challenges. For specialist roles, cultural fit, sector experience and capability remain just as important as ever.
๐ฏ HR Skills Remain in Demand
Although the wider market has softened, HR continues to feature as an area where skill shortages remain.
The March data shows that HR roles continue to appear in both permanent and temporary shortage categories nationally, and across the South of England.
Areas that remain particularly in demand include:
- experienced HR Generalists
- HR Business Partners
- Employee Relations specialists
- Talent Acquisition professionals
- Senior HR leadership roles
This reflects what many organisations are still facing:
while there may be more HR candidates active in the market, securing the right level of experience, commerciality and cultural fit remains challenging.
For employers, this means a more competitive market still exists for strong HR talent – even in a wider market that feels cooler overall.
๐ท Pay Growth Is Easing
March also pointed to softer pay growth across the UK labour market.
Starting salaries and temporary wages continued to rise, but only marginally, with March showing the weakest pace of salary growth in five months.
This softer trend is being driven by:
- tighter employer budgets
- increased labour supply
- wider business cost pressures
KPMG and REC commentary also suggests pay growth could ease further over the coming months, potentially moving closer towards around 3%, which would represent the slowest pace of growth since the pandemic period.
That said, employers are still willing to pay competitively where they see strong business value or niche skills. This is especially true in HR, where specialist experience remains highly valued.
๐ก What This Means for Employers and HR Leaders
Marchโs labour market data points to a market that is becoming more stable, but still requires careful planning.
For HR and People Leaders, the key messages are clear:
- hiring conditions are improving slowly, but confidence remains cautious
- there is more talent available in the market than this time last year
- skill shortages still exist in key HR disciplines
- salary growth is softening, but good candidates remain selective
- speed, clarity and flexibility remain critical to securing the best people
Overall, the market feels more balanced than it has for some time.
While this is not yet a full return to confidence, Marchโs data offers cautious optimism that hiring conditions may continue to improve through the rest of 2026.
For businesses considering HR hires this year, now remains a valuable opportunity to review structure, strengthen retention and secure strong talent before broader market confidence returns.
Sources:
โข KPMG and REC UK Report on Jobs โ March 2026 (compiled by S&P Global)
โข KPMG and REC London Report on Jobs โ March 2026
โข KPMG and REC South of England Report on Jobs โ March 2026