Hiring activity fell across Scotland again in November amid greater economic uncertainty and strong cost pressures.
For the second month running, the latest Royal Bank of Scotland Report on Jobs survey found that both permanent staff hires and temporary billings fell, with the former recording the quickest reduction since June 2020.
While staff availability continued to deteriorate, demand for labour expanded at a softer, but still strong rate. The ongoing imbalance of labour demand and supply led to further rises in both starting salaries and short-temp pay.
For the second successive month, permanent placements fell across Scotland in November.
The rate of reduction quickened from October to the fastest since the initial phase of the pandemic in June 2020. Increased market uncertainty and candidate shortages were blamed for the latest drop in permanent staff appointments.
Permanent placements also fell across the UK as a whole for the second month in a row; albeit at a softer pace than that seen in Scotland.
November data highlighted a fall in temp billings across Scotland for the second consecutive month. Adjusted for seasonality, the respective index pointed to a slower and modest pace of decrease. According to anecdotal evidence, concerns about the outlook weighed on labour market activity.
In contrast to the trend seen for Scotland, temp billings expanded modestly at the UK level.
As has been the case since February 2021, the supply of permanent staff across Scotland contracted during November. Furthermore, the rate of deterioration was the most severe since May and among the fastest on record. Recruiters stated that a combination of labour and skill shortages, Brexit and economic uncertainty reduced the supply of candidates.
Notably, the downturn in permanent staff supply across Scotland outstripped the UK average for the eighth month in a row.
A 21st successive monthly fall in temporary candidates across Scotland was recorded during November. The rate of reduction accelerated on the month, and was the sharpest since June. Recruiters blamed the fall on a stronger preference for permanent roles, candidate shortages and economic uncertainty.
Latest survey data signalled a further rise in salaries awarded to permanent new joiners in Scotland for the 24th successive month in November. The rate of pay inflation ticked up from October's 16-month low. The latest rise in salaries was attributed to competition for labour amid staff and skill shortages.
For the second month running, Scotland noted a quicker rise in starting salaries than recorded at the UK level.
Average hourly wages increased further across Scotland in November, thereby stretching the current sequence of inflation to two years. The rate of pay growth accelerated from October’s 18-month low. Scottish recruiters commonly noted that acute skill and candidate shortages continued to exert upward pressure on wages.
November data pointed to another monthly increase in the number of permanent vacancies across Scotland, extending the current run of expansion that began in February 2021.
Across the monitored job categories, nursing, medical and care reported the quickest rise in vacancies. Executive and professional and hotel and catering reported reduced demand for permanent staff.
Recruiters across Scotland signalled a 26th successive monthly rise in temporary vacancies during November. However, the rate of expansion cooled since the previous month and was the softest seen since February 2021.
IT and computing registered the quickest upturn in short-term vacancies, followed by accounts and financial.
Sebastian Burnside, chief economist at RBS, commented: "Greater uncertainty around the outlook and candidate shortages have taken a toll on staff hiring across Scotland, with the latest data indicating a notably steeper contraction in permanent placements, while temp billings fell for the second consecutive month.
"At the same time, labour scarcity resulted in strong growth in pay, with both starting salaries and hourly wages rising at sharper rates during November.
"The steeper drop in candidate availability across Scotland, which was often blamed on a generally low unemployment rate, fewer foreign workers, worries over the economic climate and cost of living crisis, is likely to add further upwards pressure on pay in the months ahead, particularly if firms want to attract and secure the skilled workers they need."
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