British firms hiring temp workers instead of permanent staff as Iran war worsens turbulence
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Hiring for permanent roles fell at the fastest pace for three months in April on rising cost pressures and weak sentiment, worsened by the Iran war.
PHOTO: BLOOMBERG
LONDON – British employers are relying more heavily on temporary workers, a closely watched survey shows, as they adapt to economic turbulence from the war in the Middle East.
Hiring for permanent roles fell at the fastest pace for three months in April, extending a downturn that began in 2022, according to the Recruitment and Employment Confederation (REC). Employers cited rising cost pressures and weak sentiment, worsened by the Iran war.
Pay growth remained muted, while layoffs and delayed hiring decisions pushed up the number of job seekers.
Still, companies added more short-term workers for the first time since January, seemingly as a way of navigating the volatile economic backdrop. Although the rise was modest, it marked the fastest pace of growth in 2½ years.
Bank of England (BOE) rate-setters are facing a difficult balancing act as they weigh the economy’s fragile demand against rising inflation from the energy shock linked to the Iran conflict. The BOE has so far kept interest rates on hold, but officials have signalled that they stand ready to act to rein in price pressures.
The report will provide some reassurance to policymakers worried about the possibility of a rapidly unwinding jobs market.
Mr Jon Holt, group chief executive and UK senior partner at KPMG, said the flexibility provided by temporary workers “may help avoid a deeper downturn in the labour market and support growth plans, even as they brace themselves for further economic headwinds”.
BOE policymakers are monitoring wage growth for signs of inflationary pressures coming down the line.
The REC’s pay indicator points to a steady picture, suggesting the energy shock is not fuelling a wage-price spiral yet. Recruiters said pay growth picked up in April but remained below the survey average, reflecting tighter budgets and subdued demand for staff.
The findings align with the BOE’s own survey of companies in April, which suggested the Middle East conflict has yet to feed through into pay. However, it warned that the energy price shock could become a bigger factor in wage negotiations later in 2026 and into 2027. BLOOMBERG
