Recruitment consultancies saw a notable drop in the number of people placed in permanent roles during February, amid ongoing market uncertainty and hesitancy to commit to new hires.
The Royal Bank of Scotland's seasonally-adjusted Permanent Placements Index slipped from 54.7 in January to 42.1, signalling a renewed contraction in permanent staff hires.
Meanwhile, the downturn in temporary billings accelerated, with the pace of decrease the fastest in the current five-month period of reduction. At the same time, the supply of both permanent and temporary staff shrank rapidly amid tight labour market conditions and skills shortages.
Recruiters also commented that workers were increasingly hesitant to seek out or switch roles due to an uncertain economic climate. Despite ongoing labour shortages, February data pointed to a notable cooling in the rates of both starting salary and temp wage inflation.
February data highlighted a quicker reduction in permanent staff availability across Scotland. The rate of decrease was rapid overall and quicker than the series average. Surveyed recruiters often cited skills shortages and a tight labour market when explaining the latest drop in supply.
The decline in permanent candidate numbers across Scotland outstripped that recorded for the UK as a whole.
As has been the case in each month over the last two years, temporary staff availability declined across Scotland in February. The pace of contraction was quicker than the UK-wide trend and historically sharp, with anecdotal evidence often linking the fall to a generally low unemployment rate and reluctance amongst workers to switch roles.
Salaries awarded to newly-recruited staff rose across Scotland in February, thereby extending the current upward trend observed since December 2020. Tight labour market conditions and skill shortages continued to drive pay higher as firms competed to secure talent, according to recruiters.
The rate of pay growth in Scotland outstripped that seen across the UK as a whole for the fifth successive month.
After registering the second-fastest increase in the survey’s history in January, temp wage inflation slowed notably in the latest survey period. Moreover, the rate of growth was the softest seen since April 2021.
The rate of wage inflation across Scotland was also weaker than the UK-wide trend.
Permanent job openings grew solidly across Scotland in February. However, the latest upturn was the softest seen for two years and below the historical average.
Of the eight monitored sectors, the strongest upturn in permanent staff demand was seen for nursing, medical and care, with IT and computing placing second.
Sebastian Burnside, chief economist at RBS, commented: ”The renewed expansion in permanent placements during January did not carry through to February, as the latest survey data from recruiters signalled a fresh reduction in permanent new hires.
”Furthermore, the contraction in temporary billings persisted, indicating a steep fall in short-term staff recruitment.
”At the same time, ongoing skills shortages made it difficult to acquire candidates for those that did want to fill roles.
”Growth in permanent starters’ salaries was weaker than the trend seen over the past two years, while hourly rates of pay rose at the slowest pace since April 2021.”
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