CMD Recruitment’s new South West Salary Guide paints a region under growing hiring pressure even as headline indicators for the UK suggest modest stability. According to the guide, employers in the South West face slower pay growth, longer recruitment cycles and rising retention risks; Dan Barfoot, Operations Manager at CMD Recruitment, said: “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.”

Regional and national labour market context

The report sets the South West’s average earnings at £37,195 and records local unemployment at 3.3%, while noting a 12% fall in UK vacancies and an average time-to-hire stretched to eight weeks. Those regional figures sit alongside broader official estimates and independent analysis that point to a softer labour market nationally: organisations such as the Resolution Foundation and the House of Commons Library have reported rising unemployment and weaker job growth in recent periods.

Changing worker expectations

CMD’s data highlights shifting employee priorities that are reshaping market dynamics. The guide finds 80% of workers want more paid leave, 84% regard bonuses as essential to total pay and 67% rank healthcare as the top benefit; it also reports that almost half of office employees are contemplating a career change in 2026 and that nearly one in five have already decided to move. Those changing expectations are amplifying recruitment and retention challenges for skilled roles.

Pressure on pay and benefits

The analysis flags impending changes to reward structures that could further complicate employers’ offer packages. CMD warns that a 2029 cap on National Insurance relief for salary sacrifice pension contributions , limited to £2,000 a year in the guide , may erode the value of existing pension arrangements that previously boosted take-home value for many South West workers. Against a backdrop of rising unemployment and a tighter jobs market, the firm argues employers will need to review benefit design to preserve competitiveness.

Impact of employment reforms

Proposed employment reforms are also factored into CMD’s outlook. The guide examines the rollout of Day One Statutory Sick Pay from 2026 and suggests that higher short-term absence costs could increase administrative burdens and labour expenses for permanent staff, pushing firms in sectors such as logistics, care and manufacturing towards greater use of temporary and contract labour. That trend dovetails with macro forecasts that anticipate a weaker labour market even as GDP growth is pencilled in by some forecasters.

AI adoption in recruitment

Technology is presented as both a solution and a governance challenge. CMD reports that 84% of HR teams intend to expand AI use in 2026, with routine recruitment tasks potentially automated by up to 30%. Employers already deploying AI tools say time-to-hire has fallen by between 25% and 50%, though the guide stresses increasing investment in ethical oversight and compliance to manage risks.

What employers should do next

For regional employers the message is clear: adaptation is required. “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 Barfoot added. CMD concludes that businesses that act early on pay structures, benefit offerings and flexible workforce models will be better placed to retain staff and maintain resilience as labour market conditions evolve.

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