UK recruiters signalled a pronounced increase in starting pay in January, marking the quickest rise in nearly 18 months as firms competed for hard-to-find skills even though overall hiring remained muted, according to the latest KPMG and Recruitment & Employment Confederation UK Report on Jobs.
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The survey, put together by S&P Global from responses collected between Jan. 12 and Jan. 26, recorded a solid upward move in starting salaries. Temporary wages increased as well, reaching what the report described as the joint-highest rate of inflation since May 2024.
Despite these pay gains, permanent placements continued to decline in January, although the pace of reduction eased to its slowest rate in 18 months. Recruiters attributed rising pay to competition for skills that remain scarce in the market.
Candidate availability showed continued expansion at the outset of 2026, but that growth was the softest seen in a year. The report linked the slower increase in available staff - particularly among permanent candidates - with the stronger upward pressure on starting pay and on wages for temporary roles.
Other indicators in the report suggested tentative signs of stabilisation across the recruitment market. Permanent staff appointments fell again in January, yet the rate of decline moderated to the weakest level recorded in 18 months. At the same time, temporary billings rose slightly for the first time in three months, signaling limited short-term hiring growth.
Vacancies across the UK continued to fall, but the pace of decline slowed compared with late 2025. Demand for permanent staff contracted at a marginally softer rate than in December, and the drop in demand for temporary workers also eased.
While vacancies remained on a downward trajectory, the report emphasised that pay pressures had strengthened simultaneously. The narrative presented is one of tighter conditions in specific skill areas rather than a broad recovery in hiring activity across the board.
Regional breakdowns highlighted that the easing in the decline of permanent placements was most apparent in the North of England, while the Midlands showed marginal growth in permanent appointments.
Overall, starting pay pressures were reported widely across the labour market, accompanied by rising temporary wages as recruiters vied to fill vacancies requiring specialised experience. The pattern of stronger pay growth alongside subdued hiring suggests that wages are being pushed up selectively where candidate supply remains constrained.
Note: The findings cited above are drawn directly from the KPMG and Recruitment & Employment Confederation UK Report on Jobs, compiled by S&P Global from responses between Jan. 12 and Jan. 26.