Salaries up, Placements down and Vacancies down in October

Salaries up, Placements down and Vacancies down in October

Increased uncertainty surrounding the economic climate is weighing on business decisions and candidate movement. Souring demand for labour could lead to further reductions in recruitment in the months ahead.

The Royal Bank of Scotland Report on Jobs is compiled by S&P Global from responses to questionnaires sent to a panel of around 100 Scottish recruitment and employment consultancies. The report’s October figures show that recruitment activity continued to weaken across Scotland at the start of the final quarter of
2023. Sustained downturns were recorded for both permanent staff placements and temp billings in October.

The reduction in hiring activity was accompanied by a steep deterioration in vacancies. Turning to pay, starting salaries and temp wages rose for the thirty-fifth month running in October. According to panellists, clients raised their pay offers due to efforts to secure scarce and suitably-skilled candidates.

Sebastian Burnside, Chief Economist at Royal Bank of Scotland, commented: “The latest data highlighted ongoing weakness across the Scottish jobs market. Hiring activity was cutback… Moreover, souring demand for labour could lead to further reductions in recruitment in the months ahead. The data therefore suggest that the post-lockdown hiring boom is long over, and that increased uncertainty surrounding the economic climate is weighing on business decisions and candidate movement.

“Another prominent feature of the survey is skills shortages, which make it difficult for employers to fill roles. As a result, pay pressures remain elevated by historical standards, as clients have to raise their starting salaries and wages in order to attract and secure suitable staff.”

Decline in permanent placements softens
Permanent staff placements continued to fall across Scotland in October. The rate of contraction was the weakest in the current three-month sequence of decline, however, and only modest overall. The number of people placed into permanent job roles also contracted at the UK level, and at a sharper pace than that
recorded in Scotland.

Sustained deterioration in permanent candidate availability
Permanent candidate availability contracted rapidly across Scotland during October, thereby extending the current sequence of deterioration that began in February 2021. The rate of reduction quickened from September and remained faster than the series average. Recruiters commonly noted reluctance among
potential candidates to move roles given the uncertain economic climate. In contrast, a rapid and accelerated expansion in permanent staff supply was recorded across the UK as a whole.

Rapid rise in permanent starting salaries
Salaries paid to newly-placed permanent staff in Scotland continued to increase at a marked pace in October. The rate of permanent salary inflation remained historically elevated and outpaced the UK-wide average for the fifth successive month. Survey respondents linked higher salaries to ongoing candidate shortages
and efforts to attract suitably-skilled staff.

Demand for permanent staff deteriorates in October
Demand for permanent staff deteriorated sharply, and at a pace that was the most pronounced since December 2020.

UK Wide

Permanent placements fall at softest pace since June
A cautious hiring environment persisted across the UK during October.

Sharper rise in overall candidate supply
The availability of candidates improved for the eighth straight month in October, and at a much sharper rate than in September. There were frequent reports that redundancies and subdued hiring activity had contributed to the latest increase in staff availability.

Starting salary inflation slips to 31-month low
Permanent starters’ pay remained on an upward trend in October, though the rate of increase moderated to the weakest in just over two-and-a-half years. Nevertheless, the rate of salary inflation remained sharp and was in line with the series average. Recruiters often mentioned that employers had to up pay offers to secure suitably-skilled staff and to reflect the higher cost of living.

Demand for staff stabilises in October
Following a slight reduction in September, overall demand for staff stabilised in October.

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