Private sector hiring plans are being overshadowed by public sector job losses and will lead to the employment market continuing to suffer a “slow, painful” contraction.

This was the key message to come out of the Chartered Institute of Personnel and Development’s quarterly survey of 1,000 employers, which found that the extent of public sector job losses had exceeded Office for Budget Responsibility predictions. The CIPD also forecast that the jobs market would only continue to shrink amid global economic turmoil.

Confidence in the public sector was predicted to remain low for the next three months and to fall further over the year ahead. Meanwhile, the study indicated that the voluntary sector has seen no movement in net employment intentions during the fourth quarter of 2011.

On the upside for the UK jobs market, however, fewer employers were looking to relocate abroad or make redundancies, while outsourcing and the use of migrant workers were likewise on the decline.

But warned Gerwyn Davies, the CIPD’s public policy adviser: "The downside is that recruitment intentions are falling, which will make further rises in unemployment, therefore, seem inevitable given that public sector job losses are outpacing the predictions made by the Office for Budget Responsibility. There is no immediate sign of UK labour market conditions improving in the short- or medium-term."

Last month, the CIPD urged the Coalition Government to postpone public sector job cuts because they could hinder deficit reduction plans. It said that the public sector had been shedding jobs at five times the rate previously predicted by the OBR and called a "halt to public sector job cuts while the economy and labour market remain in the current fragile condition".

The Treasury, on the other hand, has consistently claimed that private sector job creation will cancel out public sector losses by 2015 and that it was essential to stick to the Government’s deficit reduction strategy.