Outlook for jobs hits a new low

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The outlook for employment has hit a new low, according to a survey carried out for the Chartered Institute of Personnel and Development.

The institute said its survey of 500 employers suggested that the jobs market will continue to shrink in the next three months.

The report revealed that the recession was hitting public and voluntary sector jobs for the first time.

Until now private sector employees have borne the brunt of the job losses.

Public sector employers told the institute that they are forecasting a net rise in job losses, particularly in local government. Charities and other voluntary sector employers are also predicting redundancies.

The news comes as the Local Government Association said councils in England have made almost 7,000 estimated job cuts over the past six months.

Pay freeze

John Philpott, chief economist at the Chartered Institute of Personnel and Development, said he expected the situation for public sector employees to get worse.

He said: "While I expect private sector net employment intentions to start to improve in the near future, the current figures for the public sector will look like a walk in the park as the drive to balance the books gets under way in earnest."

Overall many more employers are expecting to fire rather than hire staff. The gap between the two is the biggest in the survey's five-year history.

For those in work the prospects of a pay freeze have jumped, with over a quarter of all employers planning no wage increase for staff this year.

Andrew Smith, chief economist at KPMG, which helped with the research, said that while low wage increases and cuts could reduce business costs, lower incomes also depress aggregate demand.

"Whichever way you look at it, the labour market outlook remains bleak - even though some data is showing signs that the freefall in economic activity may be coming to an end," he said.