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Insider UK
Business
Peter A Walker

Scottish permanent staff hires fall for first time in 20 months

August data revealed a renewed fall in permanent staff hires across Scotland, according to the latest Royal Bank of Scotland Report on Jobs.

The index fell below the 50.0 no-change mark, to signal a modest drop in permanent staff appointments that ended a 19-month period of expansion.

Growth in temporary billings also moderated to a seven-month low in August.

According to panellists, skills and candidate shortages weighed on hiring activity, although some recruiters also noted that an economic slowdown and rising market uncertainty added to the loss of momentum across the Scottish labour market.

At the same time, demand for staff continued to rise, which drove further increases in both starting salaries and hourly wages.

Temporary staff billings across Scotland increased for the 24th successive month during August. Though solid, the rate of expansion eased to the slowest since January and was below its long-run average.

Where a reduction was reported, panellists cited, lingering Covid-19 impacts and rising economic uncertainty.

August data highlighted a further reduction in the supply of permanent candidates across Scotland. Acute skill and candidate shortages were linked to the latest decline.

However, though the extent to which permanent staff availability contracted was the slowest in five months, it remained sharper than the UK-wide trend.

Compared to the UK-wide average, Scotland registered a faster fall in temp candidate availability for the fifth successive month.

Recruitment agencies across Scotland reported a 21st consecutive monthly rise in salaries awarded to new permanent joiners during August. The rate of starting salary inflation quickened fractionally from July and was sharp, albeit the second softest in 13 months.

According to Scottish recruiters, labour shortages drove up salaries. However, Scotland continued to record a softer rate of increase in starting salaries than that seen at the UK level.

Of the eight monitored sectors, nursing and care saw the strongest upturn in permanent staff vacancies, followed by IT and computing.

Engineering and construction recorded the fastest rise in temp vacancies across the monitored sectors, followed by IT and computing.

Sebastian Burnside, chief economist at RBS, commented: "Since April, growth in permanent placements had softened, and now the latest data finally recorded the first fall in permanent staff hires in 20 months during August.

"A loss of momentum was also observed for temp billings, which rose at the softest pace since January - the weaker trends were accompanied by reports that rising economic uncertainty had limited recruitment activity.

"Moreover, labour supply and demand imbalances persisted," he continued. "Acute skill and labour shortages weighed on the availability of candidates, while demand for labour continued to rise, albeit not as quickly as earlier in the year.

"With firms competing for labour, this resulted in further steep increases in starting salaries and temp wages during August."

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