Early Days in Middle East’s Impact on Hiring, Says REC

Why It Matters

The data signals that the UK labour market is holding up despite geopolitical tension, but sustained hiring growth hinges on how quickly the conflict’s economic fallout resolves. Policymakers and employers must address cost‑of‑living pressures to prevent a deeper slowdown.

Key Takeaways

• Permanent placements fell slightly for second month in March.
• Engineering and construction saw strongest demand among permanent roles.
• Temporary blue‑collar demand rose while retail, hotel, catering fell.
• Candidate pool grew fastest this year, especially permanent candidates.
• Hiring slowdown may extend if Gulf conflict uncertainty persists.

Pulse Analysis

The REC‑KPMG Report on Jobs provides the first quantitative glimpse of how the Gulf conflict is filtering through the UK labour market. While overall hiring slipped in March, the contraction was modest—permanent appointments fell for the second month but at the second‑slowest rate in 18 months, and the seasonally adjusted vacancies index nudged up to 46.0, just below the neutral 50 mark. This resilience suggests that businesses are still absorbing demand, even as they monitor geopolitical risk.

Sectoral analysis reveals a stark divergence. Engineering and construction continue to attract permanent talent, reflecting ongoing infrastructure projects and the need for specialised skills. In the temporary arena, blue‑collar roles are the sole sector posting growth, whereas hospitality, retail and catering experienced sharp declines. Simultaneously, the pool of available candidates expanded at the fastest pace this year, driven by recent redundancies and tighter job scarcity, with permanent candidates outpacing temporary ones. Recruiters attribute this surge to both macro‑economic pressures and the war‑induced caution among employers.

Looking ahead, the report underscores the importance of policy support to sustain the labour market’s momentum. REC chief Neil Carberry highlighted cost‑of‑living pressures and the need for pragmatic measures such as guaranteed‑hours schemes to ease employer hesitancy. KPMG’s Jon Holt warned that lingering uncertainty could defer hiring decisions, potentially postponing a full recovery. Stakeholders will need to balance short‑term resilience with long‑term strategic planning, ensuring that talent pipelines remain robust while geopolitical and economic headwinds gradually recede.