Scottish jobs market takes a dive amid 'lingering economic uncertainty'

Hiring conditions across Scotland deteriorated last month while candidate availability fell further amid “lingering economic uncertainty”, new research today reveals.

Latest data from Royal Bank of Scotland’s Report on Jobs for April found that “sharp and accelerated contractions” were recorded for both permanent and temporary jobs as economic turbulence had an impact on companies’ recruitment plans. Meanwhile candidate availability fell further, though at softer rates than seen for much of the last two years, amid reports of general skills shortages and an increased reluctance among workers to take on new roles due to the economic climate.

The report found that the number of permanent placements across Scotland fell for the third consecutive month in April. There was also a drop in temporary placements which fell rapidly at the start of the second quarter, extending the current run of contraction to seven months.

Sebastian Burnside, chief economist at Royal Bank of Scotland, said: “The latest data revealed a further deterioration in the health of the Scottish jobs market in April, as recruiters registered reduced hiring activity for both permanent and temp staff. The drop in recruitment reflected current market conditions, as the uncertain economic climate was said to have weighed on firms’ hiring plans. Filling roles also remains difficult, as ongoing skill shortages and a further drop in overall candidate availability continue to limit recruiters’ abilities to match people with vacancies.”

The Report on Jobs is compiled by S&P Global and is based on a monthly survey of around 100 recruitment and employment consultants. It provides up-to-date information on Scottish labour market trends and is seasonally adjusted. The latest report found that availability of permanent staff in Scotland contracted for the 27th successive month in April. Recruiters often blamed the subdued economic climate for the lower supply of candidates, the research found.

Short-term candidate availability across Scotland also contracted in April, with the latest reduction linked to general labour shortages, Brexit and an increased reluctance among workers to seek new roles due to worries over job security. The report said that April data also showed a “solid rise” in the number of permanent vacancies across Scotland, with IT and computing recording the sharpest rise in vacancies followed by accounts and financial.

The data highlighted a marked rise in salaries awarded to people starting permanent jobs across Scotland, while recruiters also reported a sharp and accelerated rise in temporary wages during the month. The rate of temporary wage inflation was the fastest seen since the start of 2023, with the latest upturn in pay attributed to the higher cost of living.

Meanwhile, business sentiment has risen to its highest level since 2021 as signs of optimism begin to emerge among Scottish businesses, according to the latest Addleshaw Goddard Scottish Business Monitor report. While a slight majority of firms still expect weak growth in the economy over the year ahead, almost every sector reported an improvement in the volume of business in the most recent quarter – rebounding after a decline in the previous quarter.