Recruitment Industry Trends
Following the publication of the KPMG and REC, UK Report on Jobs for November 2025, Paul Sharpe, Founder of NorthStar People, shares a summary of the key findings and what they mean for the recruitment industry as we move into December.
Key Findings for December 2025 UK Labour Market
Permanent Placements
- Permanent placements continued to fall in November, although the pace of decline eased to its weakest level since July 2024.
- The Permanent Placements Index stood at 45.5, remaining firmly below the neutral 50 mark.
- Ongoing uncertainty around the Autumn Budget, combined with higher employment costs linked to National Insurance and minimum wage pressures, continued to weigh heavily on hiring decisions.
- All English regions saw declines, with the sharpest contraction in the North of England.
Temporary Billings
- Temporary billings slipped back into contraction after a brief return to growth in October, with the index at 48.8.
- While the fall was modest, it reflects renewed caution among employers ahead of year-end.
- Regional performance was mixed: the Midlands recorded strong growth, London saw marginal increases, while the South and North of England experienced marked declines.
Demand for Staff (Vacancies)
- Overall vacancies declined for a further month, extending a two-year trend of falling demand, although the rate of decline slowed to its weakest since June.
- Permanent vacancies continued to fall faster than temporary roles.
- Public sector vacancies declined more sharply than those in the private sector, particularly for short-term roles.
- Official ONS data suggests vacancies have broadly stabilised but remain nearly 10% below pre-pandemic levels.
Staff Availability
- Candidate availability rose sharply, reaching the second-fastest rate of increase since late 2020.
- Permanent candidate supply grew at one of the strongest rates seen in the past five years, driven by redundancies and fewer vacancies.
- Temporary labour supply also increased at a historically rapid pace, particularly in London.
- This sustained rise in labour supply continues to intensify competition among candidates.
Pay Pressures
- Permanent salary growth accelerated to its highest level in five months, as employers remained willing to pay more to secure scarce skills.
- Despite this uptick, salary inflation remained historically modest due to increased labour supply.
- Temporary pay rates were unchanged overall, with regional divergence: modest increases in London and the South offset by declines in the Midlands and North.
Skills Landscape
- Acute skills shortages persist across IT, engineering, healthcare, construction, and specialist finance roles, particularly for experienced and technical professionals.
- At the same time, excess supply is evident in areas such as general administration, HR, entry-level roles, and some management positions, reflecting structural imbalances in the labour market.
What This Means for Recruiters
As we close out 2025, the labour market remains in contraction but shows early signs of stabilisation. Employers are cautious, prioritising flexibility and cost control while selectively investing in critical skills. Temporary staffing continues to act as a strategic lifeline, offering agility in an uncertain environment.
Looking ahead to January, confidence will be key. Recruiters who can provide market intelligence, advise on pay competitiveness, and guide clients through skills shortages and legislative change will be best placed to support resilience and growth in 2026.
Paul Sharpe’s View
In short: the market is still not in great shape, but there are tentative signs that the pace of decline may finally be slowing.
The overall vibe
Hiring activity remains subdued. Businesses continue to act cautiously, with uncertainty around the recent Budget keeping many hiring decisions firmly “on ice”.
Permanent jobs:
Permanent hiring fell again in November. However, this was the slowest rate of decline since July 2024. While the market is still contracting, the fact that the rate of decline is easing is a small but important positive signal.
Temporary jobs:
After a brief uptick in October, temporary hiring slipped back into contraction. The decline was modest rather than dramatic, reinforcing the view that the market is cooling rather than collapsing.
Supply and demand dynamics
Vacancies continue to fall:
The total number of job vacancies has now been declining for more than two years. That said, November saw the slowest rate of decline since June, again suggesting that conditions may be stabilising. The public sector is cutting vacancies far more aggressively than the private sector.
Candidate availability is rising fast:
There are significantly more candidates available for roles. This is positive for employers but increasingly challenging for jobseekers. Recruiters cite redundancies and a lack of new vacancies as the main drivers of this growing talent pool.
Pay trends
Permanent pay is rising:
This is one of the more surprising trends. Despite slower hiring, permanent salaries are increasing at the fastest pace in five months. Employers are still willing to pay a premium to secure high-quality, in-demand talent.
Temporary pay remains flat:
Temporary wage rates were unchanged overall in November, reflecting subdued demand and increased candidate availability.
Looking Ahead: Paul’s View on 2026
Will 2026 look materially different from 2025? At this stage, probably not. That means recruitment leaders need to focus less on waiting for recovery and more on adapting their operating model. Two areas stand out.
Solutions over volume
Customer loyalty is declining, and fill rates are reducing. Recruiters need to ask a harder question: what solutions do our customers genuinely value?
This does not mean abandoning contingent recruitment, but it does mean relying on it less as the sole revenue driver. Well-designed talent solutions build stickier client relationships and reduce the industry-wide issue of spending up to 70% of time working on roles that never generate revenue. This must be a priority going into 2026.
Technology with accountability
The industry has invested in technology for years, yet productivity remains largely unchanged. The average recruiter is still billing around £120k GP per annum (higher in contract markets).
If automation or AI is on the 2026 investment agenda, ROI has to be measured rigorously. Baseline current performance, define clear objectives, and track outcomes. Otherwise, businesses risk layering in more tech with minimal commercial impact.
That’s a wrap for 2025. The market may be stabilising, but success in 2026 will belong to those who adapt early, focus on value, and measure what truly drives performance.
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