The jobs market is set to take a significant turn for the worse in the next three months as employers put a hold on recruitment, a new study suggests.

Firms have been freezing pay and furloughing staff to protect jobs, with half of companies prepared to continue capping wages over the next year, said the Chartered Institute of Personnel and Development (CIPD) and the Adecco Group.

Employer hiring intentions have fallen to their lowest levels since the survey began in 2005.

The poll of more than 2,000 employers also found that employers’ redundancy intentions have only risen modestly compared with three months ago, highlighting the importance of the Government’s job retention scheme (JRS).

Employees should brace themselves for pay freezes or even pay cuts in the year ahead to help preserve jobs

The report predicted that the jobs market is set to take a significant turn for the worse, with more than a fifth of respondents expecting to make redundancies in the next three months.

Employers making use of the JRS said they would have made around a third of their workforce redundant on average if the scheme had not been launched.

Gerwyn Davies, of the CIPD, said: “While hiring and pay prospects have taken a significant turn for the worse, employers have so far held off from making large-scale job cuts.

“The state of the economy will have a big impact on earnings in the next 12 months.

“Employees should brace themselves for pay freezes or even pay cuts in the year ahead to help preserve jobs.”