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Bosses are planning to hire fewer staff between now and September, a survey has found.

The study from KPMG and the Chartered Institute of Personal Development of 1,200 firms found just 29 per cent of firms had plans to hire more staff between July and September – down from 37 per cent recorded for the second quarter of 2008.

However, the number of company heads planning redundancies has increased from 22 per cent to 27 per cent over the same period.

Overall national employment prospects are the worst for four years, the survey concluded.

John Philpott, the chief economist at the Chartered Institute of Personnel and Development, said: "Even if we avoid the scale of jobs fallout suffered in previous downturns, the era of the candidate's recruitment market is already over, with people in work becoming increasingly anxious that their P45 might soon be on its way."

However, pay increases are set to be modest, which will be good news for the Bank of England.

Employers are expected to award their staff an average raise of 3.7 per cent, or 3.9 per cent after bonus payments, in the third quarter.

Andrew Smith, chief economist at KPMG, said: "It looks as if employment costs, the main area over which businesses retain control, are taking the strain with employers seeking both to keep a lid on pay settlements and, in increasing numbers, planning for redundancies.

"The labour market is suddenly looking a lot less resilient."