EMPLOYERS have become more pessimistic about job prospects, with half expecting to have fewer staff next year, a new report has revealed.

A survey of 1,200 firms found the public sector was particularly gloomy about the employment outlook. The Chartered Institute of Personnel and Development said it was unsurprising confidence had dropped given the recent job losses and pledges to cut public sector waste.

Chief economist John Philpott said: "With the labour-intensive, consumer services sector experiencing tougher times, and public sector employers looking to make efficiency savings, the survey may signal more than an end of the jobs boom." More than one in four employers said they planned to recruit migrant workers to help fill a shortage of skilled staff.

Three out of four of those questioned said pay rises will be between 2 per cent and 4 per cent in the coming year, although some firms expected directors' pay to increase by more than 5 per cent.

"The vast majority of UK organisations are recruiting migrant workers to obtain skills and experience in short supply," Mr Philpott added.

"Migration is helping to prevent wage inflation - as our survey finds most employers are expecting pay pressures to remain subdued. It is not, however, generally being used to cut pay rates."

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