Page last updated at 02:17 GMT, Monday, 11 August 2008 03:17 UK

More bosses 'planning job cuts'

Companies are cutting jobs as the UK economy loses steam.

Employers expect a gloomy time ahead in the jobs market, with a rise in redundancies accompanied by a downturn in recruitment, a survey suggests.

The survey of 1,200 bosses by KPMG and the Chartered Institute of Personal Development found just 29% plan to hire staff between July and September.

That was down on the figure of 37% recorded in the second quarter of 2008.

And the number of employers planning redundancies has increased from 22% to 27% over the same period.

The era of the candidate's recruitment market is already over, with people in work becoming increasingly anxious that their P45 might soon be on its way
John Philpott

The slump in employment plans is "particularly worrying", the report said, because the third quarter is usually buoyant on the back of the wave of recruitment typically seen in September.

The UK economy has begun to slow markedly, but optimists had pointed to the high levels of employment for evidence of its relative strength.

However, employers have cut jobs in the face of rising energy costs, falling consumer confidence and a property slump.

The slowing economy has particularly taken its toll in the financial and property sectors, with home builders cutting thousands of jobs over the past few months.

"The jobs market has been one of the few bright spots in the UK economy, but cracks are appearing in the face of an increasingly uncertain economic outlook," said John Philpott, chief economist at the Chartered Institute of Personal Development (CIPD).

"Even if we avoid the scale of jobs fallout suffered in previous downturns, the era of the candidate's recruitment market is already over, with people in work becoming increasingly anxious that their P45 might soon be on its way."

'Finance pressure'

KPMG's chief economist Andrew Smith said that with wages and staffing levels being one of the overheads that firms could control, the employment market was looking "less resilient".

"Companies are now reacting to deteriorating market conditions," he said.

"With sales slowing and input costs rising, but scope to raise prices limited by weakening demand, finances are under pressure."

The latest UK unemployment figures, for the three months to May, put the jobless rate at 5.2% - with 1.62 million people out of work.

The number claiming unemployment benefit rose by 15,500 in June to 840,100 - the biggest jump since December 1992.

There are worries that if more people lose their jobs, the number of people falling behind on mortgages will rise and that house repossessions, which leapt by 48% in the first half of 2008 will become more commonplace.

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