Scottish salaries soar amid staff shortages

Edinburgh's Princes Street

The latest Royal Bank of Scotland Report on Jobs shows that Scottish labour market conditions continued to strengthen during July, with a shortage of candidates pushing up pay rates.

The supply of permanent staff in Scotland fell at the steepest rate since March 2019 — helping to cause a near record increase in permanent salaries.

Further, an eighth straight monthly increase in average hourly pay rates for short-term staff across Scotland was recorded in July.

The report showed that the number of permanent vacancies rose steeply again in July.

“Permanent placements rose for the seventh month in a row and at a quicker pace, while the rate of increase in temp billings remained close to a survey record, despite slowing on the month,” said the report.

“According to panellists, the further relaxation of COVID-19 restrictions and increased economic activity had boosted hiring activity.

“Subsequently, difficulties finding candidates persisted into the third quarter, as the supply of staff plummeted again, while vacancies continued to surge.

“This mismatch between demand and supply therefore placed further upwards pressure on rates of pay.”

Recruiters across Scotland signalled another increase in billings received from the employment of temporary workers during July, extending the current sequence of growth to 11 months.

The rate of expansion was among the fastest on record.

“Anecdotal evidence attributed the latest upturn in temp billings with the reopening of the economy and a subsequent surge in demand for staff,” said the report.

“Moreover, the rate of increase in Scotland outstripped the UK average for the third month running in July.”

Meanwhile, the supply of permanent staff in Scotland fell at steepest rate since March 2019.

“Recruitment agencies across Scotland highlighted a further fall in the availability of permanent candidates during July, extending the current sequence of reduction to six months,” said the report.

“Heightened uncertainty among candidates stemming from the pandemic, as well as surging demand for staff, were cited by respondents as having driven the latest fall in candidate numbers.

“The rate of decline was the fastest since March 2019, although not as steep as that registered for the UK as a whole.

“Shortages of staff also extended into short-term roles in July, with the supply of temporary candidates declining at the second-quickest rate on record (behind June 2021).

“Anecdotal evidence attributed the fall, which was rapid, to strong demand for staff, Brexit, and the government furlough scheme.”

The report showed a near record increase in permanent salaries.

“Pay inflation continued into July, as salaries awarded to permanent new joiners in Scotland increased for the eighth month in a row,” said the report.

“A shortage of candidates and strong demand for workers led to the latest rise in salaries, according to respondents.

“Notably, the rate of inflation was the second-fastest on record (behind July 2014).

“An eighth straight monthly increase in average hourly pay rates for short-term staff across Scotland was recorded in July.

“According to anecdotal evidence, strong demand for staff and a lack of available candidates had pushed up wages.

“The rate of inflation gathered pace from May, and was among the steepest on record.”

Sebastian Burnside, Chief Economist at Royal Bank of Scotland, said: “Latest data pointed to another strong month for the Scottish labour market, with hiring activity continuing to rise sharply for both permanent and temporary staff, and the rates of increase among the fastest recorded since the survey began in 2003.

“However, recruiters again noted challenges in finding candidates, as the supply of both short-term and permanent staff plummeted again amid reports of surging demand. Indeed, vacancies continued to rise rapidly, with the rates of increase for temporary positions highest on record and permanent staff second only to the rise witnessed in June.

“This mismatch between supply and demand is likely to pose further challenges in the months ahead, but overall, the labour market is in a good position, recouping any lost ground at a rapid pace, and hiring activity is showing little-signs of any considerable slowdown.”

About the Author

Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.