The UK labour market saw the sharpest rise in jobseekers since 2020 in March, as fewer job vacancies and a growing wave of redundancies pushed more people into the market, according to the latest data from KPMG and the Recruitment and Employment Confederation (REC).
The rise in staff availability — the most significant since December 2020 — comes as employers rein in hiring plans amid ongoing economic uncertainty, tighter recruitment budgets and rising employment costs.
The KPMG-REC permanent staff availability index jumped to 63.2 in March, up from 59.2 the previous month, while temporary staff availability also climbed to 60.2, from 59.6 in February. A score above 50 indicates rising availability.
Meanwhile, the vacancy index rose slightly to 44.2 from 41.8 — but remains well below the 50-point threshold, indicating continued contraction in demand for new hires.
Although starting salary growth remains subdued, there was a slight increase in wage inflation compared to February’s four-year low. Recruiters said some employers are raising pay to attract skilled candidates, though tighter budgets and muted demand continue to dampen overall salary growth.
“At a time when global uncertainty is peaking and businesses are assessing the impact of market volatility alongside rising employment costs, the latest data demonstrates how the economic reality continues to weigh heavy on the labour market,” said Jon Holt, UK senior partner and group chief executive at KPMG.
The slowdown in recruitment follows broader economic pressures, including rising payroll taxes and wage costs introduced in the autumn budget. From 1 April, the national minimum wage rose by 6.7%, while the main rate of employer National Insurance contributions increased from 13.8% to 15%.
“Given the substantial effects of the government’s decision to increase payroll taxes hugely, these figures were if anything slightly better than expected and suggest that there is potential in the market,” said Neil Carberry, chief executive of REC.
“Nevertheless, activity in the UK jobs market has now been subdued for almost two and a half years.”
Permanent placements have fallen every month during that time, underlining the fragility of the UK labour market despite relative resilience in other economic indicators.
The findings come as the Office for National Statistics (ONS) confirmed that its revamped labour market survey will not be ready until 2027. The ONS has faced criticism over falling response rates and unreliable labour market data, complicating efforts by the Bank of England and policymakers to set interest rates and develop employment-boosting strategies.
With jobseekers on the rise and recruitment activity under pressure, business leaders are calling for a more focused approach to labour market policy — particularly in light of ongoing fiscal and regulatory pressures affecting employers across the UK.
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Jobseekers rise at fastest rate in five years as hiring slows and redundancies grow