Permanent jobs fall sharply

Recruiters have reported a sharp fall in the availability of permanent jobs as demand for staff drops to its lowest level since 2001.

Placements for temporary staff also fell to a record low in August, according to the Recruitment and Employment Confederation (REC) and KPMG, who commissioned the survey.

Recruitment consultants also reported muted pay growth amid weak demand for staff and an increased number of candidates looking for work.

If pay growth is slowing, this could help bring inflation back down and allow the Bank of England to cut the interest rate and assist the stumbling house market.

However, a rise in unemployment makes a recession more likely.

Alan Nolan, director at KPMG, said: "The slide in the UK economy continues to hit the jobs market hard – with yet another sharp drop in recruitment."

UK employers are continuing to control payroll costs through redundancies - and by refusing to take advantage of a growing (but increasingly unused) pool of skilled labour.

"These workers are starting to drift abroad in search of employment – and there is a risk that (when the market turns) the UK will be left behind by a skills shortage."

The government could help invigorate the job market by allowing employers to defer tax payments, Mr Nolan added.

Recruitment firm Hays, which posted a 25 per cent increase in profits for the year yesterday, has also warned of a rise in unemployment.