Employer demand falls and pay stays flat

Employers' demand for new staff slipped back by one point in July, while salaries for recruits remained flat, the recruitment giant Reed will say today.

According to the monthly Jobs Index produced by the group's reed.co.uk website, Britain's pay cheques remain 5 per cent down, although the last three months' stability points to a gradually improving climate.

Despite the overall drop in demand for new recruits, some key sectors bucked the general downward trend. Recruitment in the general insurance industry has increased by 27 per cent since the first Jobs Index last December. And the charity and voluntary sector has boomed by 47 per cent to a record high. Accountancy is also performing well, with a 14 per cent rise in demand.

There are also significant differences across the country. Worryingly, demand for new staff in London slipped by two points last month, although demand rose in the surrounding South-east, as well as in the North-east, South-west, Northern Ireland and Scotland.

Martin Warnes, the managing director of reed.co.uk, said: "Employers are still a little nervous about just how sustainable economic recovery will prove to be, according to the Job Index's downwards slip in July.

"At the same time however, some key job sectors bucked the trend, with demand for new staff in these areas rising to their highest level since the index began. Clearly while demand in the public sector falls back, other areas are preparing for future growth, even though it is difficult to predict how robust this is going to be over the rest of the summer."

According to figures from the British Retail Consortium, the retail-jobs market is doing particularly well. Retailers now employ more than 22,000 extra people since last year. As the High Street has started to recover from the recession, some 3 per cent more shops have been opened, leading to a 3.6 per cent rise in the number of full-time employees. One-off factors such as the World Cup are also thought to have helped.