UK Labour Market Insights – January 2026 Key Trends

Key Trends for Technology & Electronics Recruitment

As we step into 2026, the latest KPMG and REC UK Report on Jobs signals a labour market still in transition, balancing employer caution with pockets of opportunity for those ready to act. For businesses across the electronics, engineering, and high‑technology sectors, the dynamics of early 2026 offer a strategic moment to reassess hiring plans, secure high‑value talent, and position themselves ahead of the curve.

Drawing on data from the January 2026 Report on Jobs (capturing December labour activity) and Redline’s own market observations, here’s what technology organisations need to know.

A Market Reset: What This Means for Technology & Electronics

2025 closed with ongoing caution across the UK employment landscape, with permanent placements continuing to fall and overall vacancies declining. December marked the sharpest fall in permanent staff appointments since August, extending a downturn that’s now run for 39 months. Employers cited a combination of weak business confidence and rising operational costs as key factors driving slower hiring activity.

Yet, in contrast to the broader national picture, electronics and high‑technology hiring has remained more resilient. Early indicators from Redline’s own data show January marking our highest number of permanent hires in 24 months, reinforcing that specialised technical sectors continue to buck the wider trend.

Jon Holt, Group Chief Executive and UK Senior Partner KPMG, summoned up the report:

The jobs market at the end of 2025 was still signalling caution. After a long stretch of rising cost pressures and higher global economic uncertainty, many firms continue to pause hiring and are flexing where they can by using contract/temporary staff. As we head into the New Year, this restraint is likely to remain in the near term. Chief execs who have been prioritising increased investment in tech to improve resilience and productivity, will be looking for signs of greater confidence in the wider economy before turning the hiring taps back on.

Key Takeaway for Electronics & High‑Technology

While 2025 saw reduced vacancies across the UK, our sector saw far greater stability, supported by ongoing investment in product development, NPI programmes, and operational engineering. With candidate availability now at record highs and salary inflation rising again, the early months of 2026 present a rare window:

Early movers can secure exceptionally strong talent before wider competition returns to the market.

Report Highlights

1. Permanent Placements Continue to Decline – But with Regional Bright Spots

Across the UK, permanent appointments fell sharply in December, driven by employer caution and rising costs. This marks the steepest drop since August.

However, there was one notable exception:

• The Midlands recorded growth in both permanent and temporary hiring, the only UK region to do so, demonstrating that regional engineering and tech clusters continue to invest even as national data softens. [

2. Candidate Availability at Record Highs

Candidate supply surged again in December, driven by redundancies and fewer job openings across the UK. Overall availability recorded one of the fastest growth rates since the pandemic, with permanent candidate supply increasing at the quickest pace in four months.

What This Means for Tech Employers

• A significantly deeper talent pool is now available.
• Senior and specialist engineering candidates who were previously “unmovable” are now open to new opportunities.
• Businesses acting early in 2026 can secure strong individuals who may not remain available later in the year.

3. Starting Salaries Rising Again

Despite the slowdown in hiring volumes, starting salaries rose at their fastest rate in seven months, driven by competition for high‑value and scarce technical skills.

Temporary pay also increased for the first time in three months, highlighting growing pressure on employers to move decisively when identifying high‑demand skill sets.

Redline Insight

Salary inflation is returning sooner than expected. Organisations delaying decisions may face higher costs later in H1.

What This Means for Electronics & High‑Technology Businesses in 2026

The overall message from the January data is clear:

• Demand is softening nationally, but
• Candidate supply is rising sharply, and
• Salary pressure is returning, signalling competition for top talent will intensify quickly.

For technology and electronics businesses, these combined factors make Q1 2026 a strategically advantageous hiring window.

Those who move now can:

• Capture talent at lower salary pressure than expected later in the year,
• Strengthen critical engineering, manufacturing, and R&D teams,
• Build capability ahead of product launches and growth milestones in 2026–27.

Looking Ahead: A Turning Tide?

Every indicator suggests that the market is approaching an inflection point. The December dip may not represent a long‑term reversal; rather, early 2026 could be the moment where confidence begins to return particularly in the UK’s specialist engineering and technology sectors.

Redline will continue to track market movements closely through the monthly KPMG & REC Report on Jobs and our own insight from the electronics and high‑technology community.

Let’s Talk Talent Strategy for 2026

If you’d like to explore how these trends could influence your workforce planning, or if you’re considering hiring in Q1, our specialist consultants would be delighted to help.

Let’s arrange a brief conversation whenever suits you, contact info@redlinegroup.com or call 01582 450054.