Jobs market deteriorates in Scotland amid slump in demand for labour - RBS

The Scottish jobs market took a distinct turn for the worse last month as demand for new staff further weakened and more workers stayed put, a key survey today reveals.

The latest Report on Jobs from Royal Bank of Scotland shows that both permanent staff appointments and temporary billings contracted sharply in September. Recruitment and employment consultants quizzed for the survey linked the reduced hiring activity to fewer vacancies, weaker confidence around the economic outlook and shortages of suitably-skilled candidates, making it harder to fill any outstanding roles.

Demand for staff weakened again, while the supply of permanent and temp candidates deteriorated, with some workers hesitant to move roles given “lingering uncertainty” around the economic outlook.

The Report on Jobs is compiled by S&P Global and is based on a monthly survey of around 70 recruitment and employment consultants. It provides up-to-date information on Scottish labour market trends and is seasonally adjusted.

After falling for the first time in more than two-and-a-half years in August, demand for permanent staff deteriorated further across the country during September, according to the latest Report on Jobs.

Sebastian Burnside, chief economist at Royal Bank of Scotland, said: “Recruitment activity across the Scottish labour market deteriorated as the third quarter drew to a close. Both permanent staff appointments and temp billings fell at sharp rates, with panellists linking the reductions to candidate shortages and falling demand for labour amid concerns over the wider economic climate. Uncertainty around the outlook also meant that workers were more hesitant to risk a job move, leading to further falls in staff availability.”

The report showed that competition for skilled and scarce labour led to further increases in starting pay during the month. Trends diverged, however, as permanent salaries grew at the sharpest pace since June, while temp wage inflation slipped to a three-month low and was found to be modest overall.

After falling for the first time in more than two-and-a-half years in August, demand for permanent staff deteriorated further across the country. The rate of decrease was the most pronounced since December 2020, according to the latest findings, and outpaced the UK-wide average. Of the eight monitored sectors, “executive & professional” registered the sharpest drop in vacancies, followed by “secretarial & clerical”.

After broadly stagnating in the previous survey period, temp vacancies fell across Scotland in September. The pace of contraction was modest overall but contrasted with a sustained rise at the UK level. Secretarial & clerical recorded the strongest drop in temp vacancies, followed closely by “accounts & financial”.

The availability of candidates to fill permanent job roles north of the Border decreased during September, thereby stretching the current period of decline that began in February 2021. Despite easing to a three-month low, the rate of contraction remained sharp and was broadly in line with the survey average. Recruitment consultancies noted that generally tight labour market conditions and skills shortages had weighed on candidate numbers. Meanwhile, permanent labour supply expanded across the UK as a whole in September.

September’s data pointed to a rise in salaries awarded to permanent new joiners across Scotland. The upturn was the fastest since June and “marked overall”, RBS noted. According to anecdotal evidence, stronger competition for skilled labour pushed up starting pay.

In depth: gloomy RBS data on Scottish jobs market clouds outlook for rest of 2023