Employers cut costs by replacing senior employees with lower-paid staff

Employers are saving money by replacing senior employees with less experienced staff on lower pay, statistics suggest.

The latest Report on Jobs research by the Recruitment and Employment Confederation (REC) and KPMG also found demand for staff at companies is declining at its fastest rate for more than a decade.

February recorded an index reading of 27.6 down from 27.7 in January – the weakest reading since the survey began in October 1997. Any figure below 50 indicates a decline.

Mike Stevens, head of business services at KPMG, said he had failed to find any glimmer of hope in the figures.

“Salaries for permanent and temporary hires are falling at record rates,” he said.

“In practice, we believe this is partly a result of employers replacing senior people with lower level and lower paid staff.”

“The UK jobs market is continuing its downward spiral, with placements falling for the 11th month in succession and vacancies down across most sectors.”

Only the nursing, medical and care sectors bucked the overall trend of sharply falling demand for staff.

Kevin Green, chief executive of the REC, said the jobs market was not yet close to stabilising.

“It is clear that we have not yet hit the bottom of the jobs market, with demand for staff continuing to contract,” he said.

A separate survey by Ceridian found one in 10 UK workers would take a pay cut to keep their current job.

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