28% of businesses say they will expand their workforce next year, according to a survey by PricewaterhouseCoopers, with 15% of these saying the increase will be significant.

Just 16% said they would shrink next year, compared to 43% surveyed about their expectations for 2010 at this time last year.

Just over half of respondents said filling skills shortages was their biggest concern for the forthcoming year, with "global mobility" and employment laws also surfacing as key worries for 2011.

Michael Rendell, head of HR services at PwC, said: "We expect demand to be particularly high among services, technology and manufacturing industries.

"The loyalty of many workers will have been severely tested during the last two years, and will be challenged further as the job market picks up. Identifying how best to reward and motivate these individuals should be the top priority, and will remain challenging, given pay constraints in many businesses."