Firms are being advised that they can save more money by keeping staff as the average redundancy costs employers over £16,000 before any savings are made, according to the Chartered Institute of Personnel and Development (CIPD).

"While making people redundant can seem one of the most straightforward ways of cutting costs, redundancy is itself a significant cost to most organisations with a number of direct and indirect or hidden costs," said CIPD chief economist John Philpott.

The CIPD has warned that over 600,000 UK jobs could be lost this year, with other institutions predicting that the figure could be even higher.

The latest statistics have show that 1.86m people are out of work in the UK - the highest figure since 1997.