Hiring by Scots firms retreats again in May, with 'greater confidence required to support sustained recovery', says RBS

The Scottish labour market has seen a further drop in hiring activity in May, and greater confidence will be required “to support a sustained recovery”, according to the latest Royal Bank of Scotland (RBS) Report on Jobs survey.

Residual economic uncertainty continued to discourage workers and firms alike, the study out today has found. For the fourth successive month, Scottish recruiters registered a drop in permanent staff appointments. According to anecdotal evidence, employers were less confident in the economic outlook, but the rate of contraction was the softest in the aforementioned sequence and only marginal, as some recruiters noted the fulfilment of long-standing vacancies and the initiation of new projects in the latest survey period.

Permanent candidate availability across Scotland continued to worsen in May, the 28th consecutive month to see a drop, although the rate of contraction was amongst the weakest in the current sequence.

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Turning to temp billings, these fell “markedly” across Scotland last month, extending the current run of reduction to eight months, and respondents widely linked the drop to a lack of available work, while there were also mentions that the additional Bank Holiday weighed on staff hiring. In addition, May saw temporary staff availability drop for the 27th month running, and recruiters said a preference among workers for permanent roles had reduced the pool of available candidates.

For the fourth successive month, Scottish recruiters registered a drop in permanent staff appointments, according to RBS. Picture: Jack Taylor/Getty Images.For the fourth successive month, Scottish recruiters registered a drop in permanent staff appointments, according to RBS. Picture: Jack Taylor/Getty Images.
For the fourth successive month, Scottish recruiters registered a drop in permanent staff appointments, according to RBS. Picture: Jack Taylor/Getty Images.

Average starting salaries awarded to candidates in permanent roles rose in Scotland – as has been the case since December 2020 – midway through the second quarter, but the pace of salary inflation was the softest in 27 months and below the historical average. What’s more, hourly pay rates for temp workers across Scotland rose during the latest survey period.

Sebastian Burnside, chief economist at NatWest-owned RBS, commented: “The latest survey data indicate that labour market conditions across Scotland continued to cool as economic uncertainty weighed on hiring activity and limited worker movement.”

He touched on how the downturn in permanent placements eased “notably”, adding: “There were some reports of successful recruitment, which helped soften the pace of decline, providing some encouragement. Whether this relative improvement is short-lived, or an indication of future growth, is hard to gauge, but greater confidence in the market will be required to support a sustained recovery."

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