This follows recent bleak tidings from Lloyds TSB and KPMG (subscription required for each), respectively revealing workers' collapsing confidence in job security and employers' growing intentions to cut jobs.

The REC/KPMG research finds that availability of candidates for permanent and temporary posts showed strong growth in July 2008 as the labour market slackened. At the same time, demand for permanent staff showed its second successive monthly fall, while demand for temp staff showed its first ever month-on-month fall in the survey's entire history (stretching back to October 1997).

Kevin Green, REC chief executive, spells out what this means for the labour market:

This is a clear indication that the credit crunch has started to reach the jobs market. Business confidence is low and as a result, employers are becoming much more cautious in their approach to recruiting. Following years of a candidate-driven jobs market, the balance has shifted. It could be argued that employers now have the upper hand in an increasingly competitive jobs market.

This suggests that the prospect of a wage/price spiral - in which rising inflation exerts upward pressure on pay awards, so creating further inflationary pressure - is becoming ever more unlikely.
 
As we noted in a recent article (subscription required), employers appear to have the advantage in the current pay bargaining environment. And their position looks to be more assured with each passing day.

The REC/KPMG survey will also offer little comfort to those in the recruitment industry - already the UK's most stressed-out profession, according to a recent survey (external website).

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Picture: Rex Features