IT contractors have been warned that Britain's "jobless recovery" from the recession is set to continue.

According to research from Manpower, the net employment outlook remains steady, but public sector hiring has turned to a negative rate for the first time since 1994.

The recruitment giant is now calling for urgent reform of the public sector, as short-sighted decisions made to cut costs will actually end incurring further financial burden for local authorities.

"Workforce transformation is vital to the future success of the Public sector and the challenge for employers is to economise, optimise and transform, without compromising frontline services," said the firm's UK managing director Mark Cahill.

Mr Cahill goes on to call for the use of flexible workers, such as IT contractors, to form part of a "smart, sustainable strategy".

The Recruitment & Employment Confederation has made repeated calls in recent month for flexible workers to be used to respond to peaks and troughs in public sector workloads.