Young workers to be hardest hit as public sector cuts back

The economy "faces "enormous pressure" to retrain, relocate and find new jobs for the hundreds of thousands of public-sector workers to be sacked by the coalition Government over the next five years. Leaked Treasury estimates suggest some 600,000 jobs could go.

The latest Report on Jobs from the accountancy firm KPMG and the Recruitment and Employment Confederation warns that the creation of permanent jobs across the economy is starting to slow, while temporary and part-time billing slowed to a seven-month low.

Wages and salaries, say KPMG, continued to rise – good news for individual workers but perhaps less encouraging for employers anxious to keep wage bills down.

Bernard Brown, a partner and head of business services at KPMG, said: "Demand for workers across all sectors continued to rise in June. Clearly, the proposed public sector cuts have not yet had an impact on the UK jobs market.

"However, it can now be only a matter of time before we will start to see the impact of the Government's efficiency savings strategy, which is likely to leave hundreds of thousands of public-sector workers looking for employment. The big challenge will be to transfer as many of these jobs as possible to the private sector through outsourcing and divestment, otherwise the economy will be put under enormous pressure at all levels."

Recruitment consultancies recorded another rise in permanent staff placements during June, albeit the slowest in five months. Similarly, although "still solid", growth of temporary staff billings eased to a seven-month low in June. The rate of increase remained below that signalled for permanent appointments.

The strongest rise in demand was signalled for engineering and construction workers, closely followed by executive and professional staff. Hotel and catering continued to register the weakest growth.

Any slackening in the labour market would be likely to hit young people hardest, as it has throughout this recession. More than 1 million young people are currently jobless, with many hundreds of thousands more in "hidden" unemployment, classifying themselves for example as "students" though they have no confirmed places in colleges.

Kevin Green, the chief executive of the Recruitment and Employment Confederation, added: "Our main concern is how the near million young jobseekers are going to get their first role in a highly competitive jobs market.

"This problem can only escalate due to the thousands of graduates and school leavers who will be seeking employment in the coming months.

"Youth unemployment is one of the most pressing issues we currently face in the UK and needs to be urgently addressed to prevent a 'lost generation' of workers."