New labour market data for 2026 suggests employers and workers across the South West are facing increasing pressure, despite signs of broader economic stability at a national level.
Analysis published by CMD Recruitment shows that wage growth remains constrained, hiring processes are taking longer and retention risks are rising, according to its latest South West Salary Guide.
Dan Barfoot, Operations Manager at CMD Recruitment and a recruitment professional with more than 20 years’ experience, said the findings underline the importance of regional insight.
“The data shows a labour market that is still highly pressured, particularly in the South West where pay trails national averages. Employers are facing longer hiring times, shifting candidate expectations and upcoming policy changes that will affect reward structures. Having access to clear, region-specific salary data is becoming essential for making informed workforce decisions.”
The guide reports that average earnings in the South West currently sit at £37,195, continuing to lag behind the UK average, while unemployment remains low at 3.3%.
At the same time, vacancy levels across the UK have dropped by 12%, and the average recruitment process has lengthened to eight weeks, nearly twice as long as the previous year.
CMD Recruitment’s 2026 Salary Guide includes updated salary benchmarks across sectors such as engineering, industrial and driving roles, IT, HR, finance and accountancy, as well as sales, marketing, design and SaaS.
The data also reveals evolving candidate expectations. The guide shows that 80% of workers want more paid leave, 84% see bonuses as an essential element of total compensation, and 67% identify healthcare as the most important employee benefit.
In addition, nearly half of UK office workers are considering a career change in 2026, with close to one in five already having decided to move roles.
“All these signs suggest the job market is slowing down and getting tougher, especially for those highly skilled roles. Employers may find that securing and retaining talent requires more flexible work and smarter plans for pay and staffing in 2026.” Dan added.
The report also examines forthcoming changes to pension arrangements. From 2029, National Insurance relief on salary sacrifice pension contributions will be capped at £2,000 annually. Salary sacrifice schemes have typically increased pension value by 8% to 12% for many South West employees, helping employers offset lower regional pay.
CMD Recruitment warns that reducing this relief could weaken reward packages unless employers revise their approach to benefits.
Proposed employment reforms are also explored, including the introduction of Day One Statutory Sick Pay from 2026.
The company’s analysis suggests this change may increase employment costs and administrative complexity for permanent roles, particularly in sectors with higher levels of short-term absence.
As a result, the data points to a growing reliance on temporary and contract workers in industries such as logistics, care and manufacturing.
Artificial intelligence is also playing an increasingly significant role in recruitment. The guide finds that 84% of HR teams plan to expand their use of AI tools in 2026, with AI expected to take on up to 30% of routine recruitment activity.
Employers using AI-supported recruitment are already reporting time-to-hire reductions of between 25% and 50%, while also increasing governance around ethical use and compliance.
CMD Recruitment says the guide is intended to provide employers, HR professionals and jobseekers with a clearer picture of current labour market dynamics and emerging challenges.
The company adds that businesses which adapt early to changing expectations around pay, benefits and workforce structures are more likely to retain talent and maintain resilience through 2026.
