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 August figures show that Perm hiring and vacancies decline with a weaker outlook for the Scottish labour market in the remaining months of 2023.

Headlines from the August survey are:

Permanent staff appointments contract solidly
Demand for permanent labour deteriorates
Pay pressures remain elevated
Deterioration in permanent staff supply in Scotland contrasts with a rapid increase in the UK in general.

“Permanent staff appointments contract solidly
Following a brief rise in July, latest survey data signalled a renewed fall in permanent placements across Scotland during August. Moreover, the rate of contraction was the strongest since April. The downturn in permanent staff appointments at the UK level was much quicker than that seen in Scotland.

Demand for permanent labour deteriorates
August data revealed a deterioration in permanent candidate availability across Scotland, thereby stretching the current run of decrease that began in February. The rate of contraction picked up from July and was the fastest in eight months. Increased hesitancy among people to move roles amid the current economic climate as well as skill shortages were linked to the latest reduction in permanent labour supply. Moreover, the downturn across Scotland contrasted with a rapid increase in permanent candidate numbers at the UK level.

Starting salary inflation continues to accelerate
Salaries awarded to permanent new joiners in Scotland continued to increase during August, extending the current sequence of pay growth that began in December 2020. The rate of salary inflation accelerated from July and was faster than the historical average. Scotland recorded a stronger rate of growth in permanent salaries than compared to the UK-wide trend.

Deterioration in permanent staff supply in Scotland contrasts with the rest of the UK
The UK in general experienced a rapid increase in permanent candidate numbers with the overall availability of candidates expanded for the sixth straight month in August.

Sebastian Burnside, Chief Economist at Royal Bank of Scotland, commented:

“The latest survey data highlighted renewed weakness across the Scottish labour market. A smaller pool of desirable and skilled candidates and the muted economic climate meant that hiring activity remained subdued during August, with both permanent placements and temp billings falling sharply. Moreover, fewer work opportunities translated into a reduction in permanent vacancies. Nonetheless, both starting salaries and wages continued to rise at historically strong rates. Competition for scarce and skilled candidates often meant that firms had to pay more to secure the right talent.

“Going forward, with fewer vacancies in the market, and firms already limiting their hiring, the survey suggests a weaker outlook for the Scottish labour market in the remaining months of 2023.”

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