Employers 'cut back recruitment'

Employers are cutting costs by laying off workers

Demand for permanent staff in the UK fell last month for the first time in five years, a survey suggests.

The survey by the Recruitment and Employment Confederation and KPMG said the UK job market continued to weaken as employers cut back on recruitment.

Demand for temporary workers also eased to the weakest pace since May 2003, the survey based on data from recruitment agencies and employers found.

But wage inflation accelerated despite the overall fall in job vacancies.

The survey said shrinking job opportunities meant there was a bigger pool of candidates chasing permanent and temporary work.

Alan Nolan, a director at KPMG, said the report proved the credit crunch had taken its toll and had weakened the UK jobs market.

"Many employers now seem to be accepting the inevitable - they will have to cut costs by laying off people because their businesses won't be growing as much as they could have expected a couple of months ago," he said.

KPMG said financial firms in the City and housebuilders had already shed jobs, but there was more bad news to come.

"Even the usually robust temporary jobs market is coming under pressure, adding to the likelihood of a stagnant jobs market and rising unemployment for the foreseeable future," Mr Nolan added.