Pay rates have plummeted as demand for staff weakens, a jobs survey has found.

The Recruitment and Employment Confederation (REC) and KPMG says there has been a decline in salary levels, temp pay, job vacancies and permanent job placements.

Recruitment consultancies report that labour market conditions continued to deteriorate in February as recession and reduced company activity led to a substantial decline in demand for staff.

Vacancies fell at a record pace, with only the nursing, medical and care sectors bucking the trend. Permanent and temporary staff appointments continued to decline rapidly to near record levels.

Weak demand for staff and the ready availability of well qualified staff laid off in the downturn depressed pay rates.

Harley Richards, of KPMG’s People Services team in Gatwick, said: "We struggled to find any glimmer of hope in these figures but failed. The UK jobs market is continuing its downward spiral, with placements falling for the 11th month in succesion and vacancies down across most sectors."

He though falling salaries were partly due to employers replacing senior people with more junior and lower paid staff.

"Six months ago, we hoped that some level of employment demand would have been maintained by foreign workers returning home and by the impact of early retirements - both a feature of previous recessions.

"This does not appear to be happening, perhaps because the employment situation is just as bleak elsewhere in Europe and because the impact of the credit crunch means not many can afford to retire early."

Kevin Green, REC chief executive, said: "It is clear that we have not yet hit the bottom of the jobs market with demand for staff continuing to contract."

He called on the Government to avoid any additional regulation that would deter employers from offering flexible working arrangements to job-seekers.

He said that private sector recruitment agencies would work "in increasingly close co-operation" with Jobcentre Plus.