Demand for staff fell at its fastest rate for 80 months in August, according to figures from the latest Report on Jobs.
The report by the Recruitment and Employment Confederation and professional services firm KPMG showed that permanent placements dropped for the fifth consecutive month, with the latest fall being the sharpest since November 2001.
August also saw the first fall in temps agency billings since May 2003. Responding recruitment consultancies frequently claimed that their clients had cut back on temps due to the tough business climate.
The rate of average starting salaries for permanent staff also fell, as well as hourly rates for temporary and contract staff.
Alan Nolan, director at KPMG, said: “The slide in the UK economy continues to hit the job 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.”
Kevin Green, REC chief executive, said: “The deteriorating economy is now having the expected negative impact on the labour market. The demand for both permanent and temporary workers is weakening, although it must be remembered this follows a period of unprecedented high demand for staff.”