Redundancies are set to increase “sharply” in the next few months, with most public sector employers planning to cut jobs, according to new report.
A survey of 750 employers showed that staffing levels were heading for a fall after holding up relatively well last year.
The Chartered Institute of Personnel and Development (CIPD) said more employers were planning to cut staff than recruit new employees.
Two-thirds of public sector organisations will axe jobs in the first three months of the year, rising to three out of four in local government, said the report.
Job creation in private firms offered some hope on the employment front, with those in manufacturing and services providing most of the new jobs, according to the study.
Gerwyn Davies, public policy adviser at the CIPD, said: “The first three months of 2011 was always going to be a quarter of reckoning for the jobs market, and it seems that last year’s modest recovery will be reversed by a modest relapse this year.
“Encouragingly, the private sector continues to generate new jobs, but we are some way off the jobs boom that we are all hoping for.
“While private sector jobs generation is encouraging, it’s more important than ever that the Government continues its growth efforts in the private sector so as to offset the jobs gloom in the public sector.”
Malcolm Edge of KPMG, which helped with the research, added: “These figures show that there continues to be a marked divide in the UK jobs market, with the public sector still fearing the worst while the private sector shows signs of better health.
“Manufacturing and services are engines of the national UK economy so it is encouraging to see positive growth there and with this resurgence in the manufacturing sector, one hopes that the trend will continue.
“However, the private sector recovery is not yet fully established and therefore remains susceptible to shocks.”
Expectations of pay rises have fallen from 1.5 per cent to 1.3 per cent in recent months, although pay is forecast to be cut slightly in the public sector, said the report.
The study was published ahead of new unemployment figures on Wednesday which will be keenly studied to see if spending cuts in the public sector have started to feed through to the jobs market.
Unemployment increased by 49,000 to 2.5 million in the three months to November and analysts expect another rise when the new figures are unveiled.