The Rhino Report – October 2026

Welcome to this month's Rhino Report. October finds the jobs market in a slightly odd mood. Permanent hiring has grown for the first time in almost four years, vacancies have just fallen to a twelve-year low, and a good share of the country's hiring decisions appear to be sitting in a folder marked "after the Budget".

This month we're looking at why a bigger candidate pool still isn't producing more of the right people, what half a point of permanent growth is actually worth, why candidates are perfectly happy to be interviewed by a robot but don't trust its judgement, what happens to the lists keeping skilled trades sponsorable after 31 December, and the new rules heading for temporary work just as it's carrying the recovery. Some good news, some less good news, and one deadline worth putting in the diary.

More Candidates. Same Shortages.

The ONS labour market figures published on 15 September put UK vacancies at 702,000 for June to August, down 8,000 on the previous quarter and the eighth quarterly fall in a row. Outside the pandemic, that's the lowest total since 2014. On the other side of the desk, the KPMG and REC Report on Jobs found candidate availability rising at its fastest rate in three months, with recruiters pointing to redundancies as a major cause. The Learning and Work Institute makes a useful distinction here: the rising number of jobseekers for every vacancy is being driven more by a growing pool of people looking for work than by demand falling away. The market isn't so much collapsing as filling up.

You can see that in the application numbers. Greenhouse's 2026 hiring benchmark found the average number of applications per job in Europe rose by 85% between 2022 and 2025, from 99 to 183. Easier, faster and increasingly AI-assisted applications probably explain a fair amount of that, and none of it means the talent pool has nearly doubled. For a lot of roles, what has nearly doubled is the screening. A hiring manager with 183 applications and three people who can genuinely do the job hasn't been handed more choice. They've been handed a longer afternoon.

The same KPMG and REC survey found permanent starting salaries rising at their fastest rate since January, with recruiters citing competition for highly skilled and niche candidates. That sits awkwardly next to the wider pay picture, where regular pay growth eased to 3.5%, or 0.6% after inflation, and private-sector regular pay grew by just 2.9%. In other words, the market is paying more for the people it can't find while the general pay picture cools. We see this most clearly in the trades we recruit for. A bigger applicant pool hasn't produced noticeably more coded welders, pipefitters or marine electricians holding the right tickets, and the businesses competing for them aren't behaving like they're in a buyer's market.

The less comfortable figure is at the start of people's careers. Unemployment among 16 to 24-year-olds reached 16.4%, or 751,000 people, up from 14.3% a year earlier. We've written about graduate vacancies twice in recent months, and this suggests the squeeze on the first rung isn't confined to graduates. For anyone applying at the moment, the practical lesson from all of this is fairly consistent: in a crowded market, fewer applications with clear evidence of what you've actually done will usually get further than a large number of polished ones that look like everyone else's.

Permanent Jobs Are Back. Just About.

Last month we reported that permanent placements had finally stopped falling after 45 consecutive months. The September KPMG and REC Report on Jobs, published on 7 September and covering August, went one better: the permanent placements index reached 50.5, the first reading above 50 since September 2022. Fifty means no change, so 50.5 is growth in roughly the way light drizzle is weather. It counts, and after nearly four years of decline it genuinely matters, but nobody should be redecorating on the strength of it. Temporary billings rose for a fifth consecutive month at the second-fastest rate in more than three years, while overall vacancies fell for the 34th month running, albeit at one of the softest rates in two years.

The detail is more interesting than the headline. Permanent vacancies rose in only two of the ten sectors tracked, Engineering and Accounting/Financial, while the other eight fell, with retail and hotel and catering the weakest. Permanent placements grew in London and the Midlands but still fell in the South and North of England. So the recovery so far is narrow, regional and heavily tilted towards skills that were already hard to find. Engineering's place on that short list won't surprise anyone in mechanical engineering recruitment. The Royal Academy of Engineering estimates the UK needs up to 240,000 engineers and technicians a year for the next decade, though it also warns that sector headcount targets carry a degree of "spurious precision", because a single delayed project can open or close a large gap almost overnight. That matches what we see. Engineering demand rarely arrives as a steady trickle. It turns up in lumps when a contract is awarded or a programme moves into its next phase, which is why the businesses that scale engineering teams quickly tend to be the ones that already know where the people are before the lump arrives.

Whether half a point becomes something bigger depends heavily on 28 October, when the new Chancellor delivers their first Autumn Budget. The REC's latest JobsOutlook, published on 29 September and based on 704 employers surveyed between mid-June and mid-August, found confidence in their own hiring and investment decisions had improved by six points but still sat at a net balance of -8%. Confidence in the wider economy was at -39%, which is better than it was, in the same way a cold is better than flu. The recruitment industry's biggest single Budget request is a cut in non-wage employment costs, specifically a phased restoration of the employer National Insurance threshold. Maxine Bligh, the REC's interim chief executive, summed up the mood neatly: "let's not mistake improvement for recovery." Until the Budget lands, we'd expect plenty of permanent hires to be approved in principle and then quietly left on the side until somebody in finance has read the small print.

Candidates Like AI Interviews. They Just Don't Trust Them.

Here's a finding that recruiters may prefer not to dwell on. Bullhorn's 2026 GRID Talent Trends Report, published on 23 September and based on around 2,300 respondents, found that 92% of candidates interviewed by an AI voice agent rated the experience as good as or better than an interview with a live recruiter. Being asked sensible questions at a time that suits you, by something that never runs late or checks its phone, turns out to be quite popular.

Being judged by it is a different story. Greenhouse's 2026 research found only 26% of applicants trust AI to evaluate them fairly, so candidates appear happy to have the conversation but much less happy to let the software decide what it meant. Employers have their own trust problem running the other way. One analysis of 19,368 live AI interviews by the hiring platform Fabric flagged 38.5% for suspected cheating behaviour, with the rate climbing from 9% to 45% over three months, and software engineering interviews flagged far more often than sales interviews. Experian has named deepfake job candidates as one of its top five fraud threats for 2026. Suspected cases still far outnumber confirmed ones, so the scale is probably smaller than the more alarming headlines suggest, but the direction is clear enough. In some corners of white-collar hiring, an AI interviewer is now assessing AI-assisted answers, which is a perfectly pleasant conversation for two pieces of software while the humans wait outside.

Skilled trades have a natural advantage here. A coded weld either passes its test or it doesn't. Tickets and certifications can be checked against the issuing body, and a site induction requires somebody to physically turn up. Verifying that kind of evidence has always been part of supplying skilled trades, and it's starting to look less like an administrative chore and more like something the rest of the market would quite like to have.

The Shortage Occupation List Has a Deadline

Plenty of employers still search for the "shortage occupation list", which is understandable, although it was replaced by the Immigration Salary List back in 2024. The more pressing issue is what's happening to its successors. Since the skill threshold for new Skilled Worker sponsorship rose to degree level (RQF 6), many sub-degree trades at RQF 3 to 5, including roles such as welders and fitters, have only remained sponsorable through the Temporary Shortage List and the expanded Immigration Salary List. As the House of Commons Library sets out, both are time-limited to the end of 2026. The Migration Advisory Committee has made its recommendations on what should follow. What actually replaces them after 31 December is the question engineering employers will be asking for the rest of this quarter.

The Home Office did publish a new Statement of Changes, HC 584, on 3 September, with its main changes taking effect on 8 October. For Skilled Workers, though, the headline change is narrow: workers recognised as victims of modern slavery will be able to work for any employer. It sits on top of rules already in force, including B2-level English for new applicants since 8 January and a higher immigration skills charge since December 2025, and ahead of the Graduate visa being cut from two years to 18 months from 1 January 2027. Existing visa holders keep transitional protection, which helps current crews but does very little for the next ones.

For anyone planning project labour for the first quarter of 2027, the timing is the uncomfortable part. Sponsorship decisions, certificates and travel take time, and a crew needed in February is effectively being planned now, against rules that haven't been finalised. It's also worth remembering that since Brexit, a skilled tradesperson from Romania or Poland coming to the UK for the first time needs sponsoring like anyone else. Working with trades through our base in Constanța as well as here in the UK, this is a question we expect to hear a great deal more of before Christmas.

Temp Work Is Booming. New Rules Are Coming.

Last month we mentioned that some employers were reportedly considering agency labour as a way of keeping their flexibility outside the coming guaranteed-hours rules. It turns out that route is less of a way round than it looked. Under the Employment Rights Act 2025, qualifying agency workers will need to be offered guaranteed hours reflecting what they regularly work over a reference period, expected to be 12 weeks, along with reasonable notice of shifts and compensation for short-notice cancellations. By default the end hirer makes the offer, and the pay offered can be no worse than current agency terms. The reforms are due in 2027, the government's consultation closed on 25 August, and its response is still awaited.

On 7 and 8 September, the industry's main temporary-labour bodies, including the REC, APSCo, the FCSA, the Association of Labour Providers, TEAM, Professional Passport and the TRN, jointly wrote to government asking it to pause applying the rules to agency workers. Their argument is that agency work is largely chosen for its flexibility and is fundamentally different from the one-sided zero-hours arrangements the policy was designed to tackle. The timing is what gives the row its edge. Temporary work is currently the healthiest part of the market, and the REC has described it as complementing permanent hiring rather than replacing it. Adding cost or uncertainty to temporary supply now means adding it to the one engine that's actually running.

Contractor supply chains already have a newer rule to digest. Since 6 April, joint and several liability for umbrella companies has made the agency closest to the client liable for any PAYE and National Insurance an umbrella fails to pay, with no due-diligence defence, and where there's no agency involved, the end client carries that liability instead. HMRC expects the measure to protect around £715 million in 2026–27, which gives a fair indication of how much it thought was going missing. Agencies are trimming their umbrella supplier lists in response, and for contract engineering labour, the payroll route a welder or fitter is paid through has become a much more common question in tender conversations. For businesses relying on flexible or hourly staffing, how a supplier pays its workers is now as worth checking as who it supplies.

Put the month's research side by side and a pattern emerges. The market is improving in exactly the places where good people are hardest to find: engineering vacancies, specialist starting salaries and temporary billings. Those are also exactly the places where the rules are being rewritten, from who can be sponsored after 31 December to how agency workers' hours will work and who is liable when a contractor's tax goes unpaid. The next ONS figures arrive on 20 October and the Budget eight days later, so by November we should know whether half a point was the start of something or simply a rounding error with good timing. Until then, the businesses most likely to benefit are the ones that have worked out what they need before the rules, or a competitor, decide for them.

See you next month.