UK Labour Market Insights – March 2026 Trends

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The latest KPMG & REC UK Report on Jobs (March 2026) indicates further stabilisation across the UK labour market, with February bringing the strongest signs of improvement seen in nearly three years. For organisations in electronics, engineering, technology, and advanced manufacturing, the data points toward a shifting hiring landscape, one that offers an important strategic opportunity ahead of expected demand recovery.

This article summarises the developments most relevant to engineering leaders, technology executives, HR strategists, and C‑suite decision‑makers planning their 2026 workforce strategy.

📊 Key UK Labour Market Trends – February Activity

1. Permanent Hiring Approaches Stability

Permanent placements fell only slightly, the weakest decline since March 2023, suggesting an improving employer appetite to progress essential hires despite continued economic caution.

2. Temporary/Contract billings dip marginally

Temporary and contract billings dipped after January’s uplift, although the decline remains milder than 2025 averages. Many organisations continue to delay short‑term hiring until clearer economic indicators emerge.

3. Vacancies decline at the slowest rate in nine months

While overall job demand is still falling, February’s contraction is the softest since May 2025.

• Engineering/technology was the only sector to show growth, outperforming all others.
• Permanent vacancies declined at the slowest pace in nine months.

4. Candidate availability still increases

Job‑seeker availability increased across most regions (excluding London), driven by layoffs, cost‑cutting, and restructuring.

• Permanent availability rose sharply.
• Contractor/Temp availability expanded at its slowest pace in over a year.

5. Starting salaries and contractor rates continue to rise

February marked five consecutive years of permanent salary inflation. Despite a slight easing, wage growth remains significant in engineering and technology roles due to sustained competition for specialised skill sets.

Industry Comment

Jon Holt, Group Chief Executive and UK Senior Partner at KPMG, Commented:

“Despite a marginal fall in hiring last month, the jobs market was showing its strongest signs of improvement in three years, with hiring at its closest point of turning positive…

Resilience is now the new normal, so we may likely see these signs of recovery stall again in the near term as chief execs take stock.”

🔧Hiring Insights for Electronics, Engineering & High Technology Employers

1. Engineering leads UK hiring activity

Engineering was the only sector with rising permanent vacancies, reaffirming that technical and STEM‑dominated fields remain structurally resilient.

2. Specialist skill shortages persist across critical STEM disciplines

Despite an increase in candidate supply, scarcity remains across high‑value disciplines:

• Electronics & Electrical Engineering
• Software & Firmware Engineers
• AI/ML, Data Engineering & Cyber
• Field Service, Commissioning & Project Engineering
• Technical Sales, Product Manager & STEM roles

These shortages remain particularly acute in regions with advanced aerospace, defence, semiconductor, quantum, energy, or manufacturing clusters.

3. Salary inflation reflects rising competition for specialist talent

Competition for niche technical skills continues to drive salary increases, especially where engineering and innovation ecosystems are densest.

4. Candidate availability presents a strategic window

With demand still subdued but availability rising, proactive employers can secure high‑calibre talent before market conditions tighten later in 2026.

📡 What This Means for Your 2026 Talent Strategy

For C&D-Suite and HR Leaders, in engineering, electronics, technology and industrial sectors, the message is clear:

• Advance critical hires now while competition is reduced.
• Prepare for sustained skills shortages in engineering, software, digital and AI-related roles.
• Use flexible workforce strategies, such as contractors, interim specialists, and hybrid delivery teams.
• Increase hiring speed and candidate engagement to secure niche talent.
• Build AI-enabled workforce capability, as role evolution accelerates.

📈 Redline’s Insight

Our February activity mirrors the REC findings:

• Strong demand across engineering, electronics and technology roles
• Requirements for permanent and contract specialists remain above seasonal norms
• Hiring confidence remains steady in innovation-led organisations

What This Means for Your 2026 Talent Strategy

We’d be pleased to discuss how these trends impact your engineering, R&D, operations, technology, and sales & marketing teams specifically. Let's arrange a conversation, contact info@redlinegroup.com or call 01582 450054