• Swindon & Wiltshire Economy
• Thursday August 20 2026

Pay rises outpace hiring slowdown, jobs report says

Pay is finally moving in the right direction for jobseekers across the South of England, even as employers keep a tight grip on permanent hiring, according to a new report.

The latest KPMG and REC Report on Jobs showed starting salaries edged up in July and temporary pay rates surged at the second-fastest pace in 14 months, despite a continued slide in permanent placements and a cooling in temp billings.

The data, compiled by S&P Global from around 150 recruitment consultancies, points to a cautious labour market.

Permanent hiring fell for the 40th consecutive month in the region, though the rate of contraction was the second-weakest over that period.

Recruiters blamed weak business confidence, political uncertainty and rising costs for paused or cancelled recruitment plans.

Temp billings grew for a fourth straight month, driven by demand for contract staff and short-term projects, but the pace of expansion slowed to the weakest in the current growth phase.

Demand for temporary workers also dipped, albeit at the slowest rate in 32 months, while permanent vacancies declined more sharply than the UK average.

On the supply side, candidate numbers surged. The Permanent Staff Availability Index recorded another rapid rise, linked to redundancies and fewer job opportunities, with temporary labour supply also increasing sharply.

Recruiters said this influx has not solved all hiring challenges, citing persistent skills mismatches—shortages in hospitality and healthcare coexist with strong demand for cyber security and IT talent.

Pay trends offered the clearest bright spot. After a marginal fall in June, permanent starting salaries rose slightly in July, though inflation remained modest and below the historical average.

Temp pay, however, jumped solidly, with competition for specific skill sets pushing rates higher.

“The second half of the year has brought some tentative signs of improvement for the South West’s jobs market, but the overall picture remains mixed,” said David Williams, Bristol Office senior partner at KPMG UK.

He noted businesses are leaning on temporary staff to maintain flexibility while managing cost and economic uncertainty, and called for stronger local talent pipelines to support recovery.

Maxine Bligh of the Recruitment and Employment Confederation, described the rise in temp billings as “a ray of light” but warned firms need greater confidence on the economy, politics and costs before committing to permanent hires.

She urged the government to use the Autumn Budget to boost business confidence, deliver on the Industrial Strategy, and take a pragmatic approach to Employment Rights Act implementation—particularly on guaranteed hours—to unlock hiring and investment.

Dan Barfoot, operations manager a Wiltshire- and Bath-based agency CMD Recruitment, and contributor to the report, said: “Pay rises have certainly been on the increase with a lot of candidates at the moment.

“There has been a surge in temporary rates due to the national minimum wage and national living wage, but I think a lot of companies now are evaluating the true cost of a hire against performance and KPIs which has seen a lot of companies release people due to highlighting inefficiencies and where they can in fact use their current resources more for the salary they are paid.

“With the current inflation rate and interest rate and cost to employ I think employers are just now looking at their staff and what they pay them and if they feel they are underperforming there may be better people in the marketplace who can do the job without any increased cost.

“Hybrid and remote roles seem to stay constant and employers who operate this model can hire below market rate as flexibility often outweighs the salary aspirations for candidates.”

Image by Sue Styles from Pixabay