The current employment situation shows no sign of abating, according to the latest quarterly CIPD/KPMG survey of employers’ recruitment and redundancy plans.

The survey shows UK job prospects are deteriorating “at an alarming rate” while the size of average pay rises is shrinking.

The winter Labour Market Outlook (LMO) survey, which polled 892 UK employers, also shows more than one in three (36%) companies plan to cut jobs in the first quarter of this year.

The LMO shows more employers are planning to reduce their workforce than increase it.

The proportion of employers planning to cut jobs (36%) is more than those planning to hire additional staff (27%).

It is the first negative balance recorded in the five years since the survey began.

The LMO survey also finds that employers intend to assess pay increases in the coming months.

Those who plan pay reviews expect pay to increase on average by 2.6% but one in eight employers does not intend to conduct a pay review in 2009.

John Philpott, chief economist at the Chartered Institute of Personnel and Development (CIPD), said: “These latest figures suggest that job prospects are deteriorating at an alarming rate. The labour market outlook is clearly even worse than expected at the turn of the year.

“Official statistics confirm that unemployment passed two million at the end of 2008.

"It now seems sadly inevitable that UK unemployment will top three million before the jobs market finally starts to recover.”