The public sector is the second biggest employer of accountancy contractors in the UK, increasing its share of the contractor market from 33.9 per cent to 37.1 per cent over the last quarter, reveals research by giant group plc, the contractor services provider.

This is higher than the average for the public sector which employs 19.5 per cent of the UK workforce overall, according to data from National Statistics.

According to giant, the economic uncertainty is putting greater demands on accountancy skills in the public sector, which is trying to improve its financial management in order to meet a target of achieving £30 billion of value-for-money savings by 2010.

Giant managing director Matthew Brown said: “Accountants within the Treasury have obviously seen a massive increase in their workload in the wake of the banking crisis. Boosting skills in-house isn’t an option short-term.”

“Historically, the public sector has been portrayed as having weaker financial management skills than the private sector, and with pressure mounting on the public sector to make significant reductions to the bottom line in a short period of time, it is increasingly reliant on external accountancy skills.”

The research also suggested 67.7 per cent of accountancy contractors still expect their earnings to rise over the next year.

January`s Report On Jobs, supported by the Recruitment and Employment Confederation and KPMG, has shown steep declines in the recruitment market, although not as sharp as the figures for the previous month.

It does, however, show demand for staff has fallen at its fastest pace since start of survey in October 1997.

The only sector to survive the seeming vacancy cull was the nursing, medical and care sector.

Permanent salaries declined at series record rate while temp pay also fell sharply and the report hinted that employers would be better-equipped to get well-qualified staff.

Mike Stevens, partner and head of business services at KPMG said: “Yet another month of desperate news on the UK employment front although there is a perceptible slowing in the rate of decline in permanent placements.

“Most employers are now looking at ways to cut cost to mitigate falling sales revenues. High on the list of costs, for what has largely become a service economy, is wages.

“So most companies are considering redundancy plans. The best employers are already looking at more imaginative ideas, for example by inviting staff to volunteer to reduce pay in return for a shorter working week during the recession.”