6,341 job losses are imminent in UK employment agencies next year, the 2002 edition of the Plimsoll Portfolio Analysis: Employment Agencies has warned. At least half of the industry will need to cut back on staff over the next 12 months, the report claims.

Salary increases over the last three years rather than recent economic uncertainty are to blame, the survey suggests. Commenting on the results, senior analyst at Plimsoll David Pattison said: ‘There is little doubt that managers will use the current economic and market conditions to make decisions which, frankly, they should have made 18 months ago.’

The cost of employing staff has increased by 60% and sales have only risen by 56%, according to the report. Although more than half have increased their profits, 80% of companies are paying higher salaries than three years ago. Next year’s average salary is expected to rise by 4.6%, from £29,133 to £30,467; an increase they cannot afford to pay.

Larger companies will be the worst affected by the cutbacks, Plimsoll said. One major player could cut as many as 544 jobs in an effort to save its business. Many others are expected to make similar cutbacks and at least 185 companies are experiencing serious financial difficulties.