Weakening jobs growth underscores fragility of Scotland’s economy

By SCOTT REID
Published on 16/07/2012 00:00

Fresh doubts about the strength of Scotland’s economic recovery emerged today after a key report signalled the weakest labour market conditions in six months.

The number of people being placed in permanent jobs rose for the sixth consecutive month in June, but was at the slowest pace since the start of the year, according to the latest Bank of Scotland Report on Jobs.

More than a third – 36 per cent – of recruitment consultants surveyed reported an
increase in permanent placements last month, while 28 per cent said there was a decline. However, the outcome was the weakest since January.

Temporary billings, meanwhile, fell for the first time this year in June.

The report is seen as one of the most authoritative snapshots of Scotland’s labour market and is based on the responses from more than 100 recruitment and employment agencies.

Last week, the Scottish Chambers of Commerce’s business survey suggested that the economy weakened in the second quarter as confidence seen at the start of the year evaporated in the face of the global downturn.

The Bank of Scotland said demand for both permanent and temporary staff was highest in the IT and computing sector, followed by hotel and catering and secretarial and clerical.

Average salaries awarded to permanent staff fell during June, ending a four-month period of increases. The report noted that the rate of decline was the fastest since September 2010. Temporary hourly pay rates were broadly unchanged for the second month running.

The report’s labour market barometer, an indicator designed to provide a single-figure snapshot of conditions, where 50 equates to no change, registered at 52.3 in June, down from 54.8 a month earlier.

Donald MacRae, chief economist at Bank of Scotland, said: “The Report on Jobs for June showed vacancies continuing to rise and an increase in the numbers of people appointed to permanent jobs. However, the rate of growth slowed, showing a weakening in labour market conditions.”

A spokeswoman for the Scottish Government said: “This report shows improvement in Scottish labour market conditions… in contrast to the position for the UK, where the survey indicated a deterioration in labour market conditions.

“This is further evidence that the UK government has to admit that its austerity programme is failing and that it’s time to take action to boost growth.”

Labour’s finance spokesman Ken Macintosh said: “Any sign of increased employment opportunities is of course welcome, but as last month’s ONS [Office for National Statistics] figures showed, the true picture in Scotland is quite mixed.

“Unemployment is still up on a year ago and unemployment for those aged 25-49, who make up the core segment of the
labour market, is increasing.”