Staff cutbacks are expected to hit the public sector in the next six months.

It is the first predicted fall in employment levels since the Gershon Review in 2004 which included the loss of 80,000 civil service jobs are part of a £21 billion saving over four years.

The latest findings from the Recruitment Confidence Index (RCI), produced by Cranfield School of Management, reveal that 89 percent of public sector organisations expect their employment levels to either fall or remain at the same level over the next six months. This compares to only 55 percent of private sector organisations.

Similarly, 85 percent of public sector organisations expect their recruitment activity to drop or stay the same compared to 60 percent of private sector organisations.

Professor Shaun Tyson of the Cranfield School of Management, said: "The findings reflect the more stringent environment faced by the public sector, where the many years of expansion have come to an end. The focus now is upon leveraging value for money rather than extensive recruitment."

Emma Parry, Research Fellow at Cranfield School of Management said: "The recruitment marketplace has appeared positive for some time now with the private sector, and particularly service sector organisations, recruiting workers. This quarter we can see a stark contrast between the still buoyant picture in the private sector and the apparent cutbacks in the public sector which may be the first indicator that the implications of the 2004 Review are filtering through. A drop in public sector recruitment activity and employment levels now being predicted is an inevitable consequence of such policies."

The research showed that recruitment activity overall remains relatively buoyant, with over a third (36 percent) of organisations expecting activity to increase over the next six months. Similarly, 40 percent of organisations overall expect employment levels to rise. This confidence is fuelled by positive predictions from the private sector.