Recruitment crashes to record low

The research from the REC and KPMG shows for both permanent and temporary positions the demand for staff fell at record rates, with the exception of the nursing, medical and care sectors. According to the Report on Jobs, anecdotal evidence suggests the growing number of applicants has diluted candidates' bargaining power.

On Monday, the prime minister announced 100,000 jobs would be created in the public sector to offset rising unemployment.

But this comes to light as the Government moots removing the VAT exemption employers currently enjoy on the wages of temporary staff in April. This would cost UK business £150 million on temporary posts and the REC believes it would further reduce the number of available jobs.

Kevin Green, chief executive of the REC, said: "At a time when the Government is proposing job creation measures, the REC will be seeking urgent meetings with the Government about its proposed removal of the VAT concession in April. We should all be working together to create employment opportunities, not taxing them out of existence."

But Mike Stevens, partner and head of business services at KPMG, said: "We have moved towards a bonus culture where a significant part of total pay is bonus and the employer's profits. Thus salary cost should fall in time of recession reducing the need to cut staff. And the UK has been a magnet for foreign workers for the last five years and recession may mean they chose to return home where they can live more cheaply, if work is no longer available."