Overall demand for staff has weakened since the end of 2007 but employers have yet to start cutting jobs, according to the latest quarterly CIPD/KPMG Labour Market Outlook survey of UK employers.
The research found that demand for staff was at its weakest level for any first quarter since 2004 in the first three months of 2008, but employers are currently adopting a ‘wait and see' policy towards staffing requirements rather than laying off staff.
"Conditions in the UK labour market are clearly softer than six months ago and softer than at this time of year for several years," said Dr John Philpott, chief economist at the Chartered Institute of Personnel and Development (CIPD).
"But net hiring remains strongly positive which suggests that while the labour market is currently experiencing a period of relative slowdown, the market is far from approaching a state of meltdown.
"However, with employers in ‘wait and see' mode, it remains possible that falling confidence in the outlook for the economy might still trigger a wave of job cuts," he added.
"If so the tipping point in confidence could result in a sudden avalanche of redundancies and quickly transform the current relatively benign jobs scene. A further early cut in interest rates would be advisable to limit the chances of this outcome."
The survey also revealed that 37% of employers intended to hire in the period between March and May, an increase on the 34% recorded in the Winter quarter but well down on the total for last Autumn of 46%.
The Spring 2008 figure is also lower than that recorded in Spring 2007 (39%), Spring 2006 (41%), Spring 2005 (49%) and Spring 2004 (53%).
The research also revealed that pay rises remained modest and there seemed to be no inflation of pay deals as a result of higher living costs.
Almost two in five employers surveyed intended to carry out a staff pay review in the spring quarter, it added. Of these a quarter expected to be awarding average pay increases of 2% and almost a third (32%) increases of 3%.
