Acute shortages of skills & labour as Scots hiring falls

Data for August has revealed a renewed fall in permanent staff hires across Scotland, according to the latest Royal Bank of Scotland Report on Jobs survey.

The report said “acute” shortages of skills and candidates weighed on hiring activity.

However, some recruiters also noted that economic slowdown and rising market uncertainty added to the loss of momentum across the Scottish labour market.

At the same time, demand for staff continued to rise, which drove further increases in both starting salaries and hourly wages.

“The seasonally adjusted Permanent Placements Index fell below the 50.0 no-change mark, to signal a modest drop in permanent staff appointments that ended a 19- month period of expansion,” said the report.

“Growth in temp billings meanwhile moderated to a seven-month low in August …

“Scottish recruiters reported a fall in permanent staff appointments during August, thereby ending a 19-month period of expansion.

“Anecdotal evidence suggested that the contraction stemmed from a slowdown in market conditions and candidate shortages.

“Though only modest, the reduction in Scotland contrasted with the trend seen across the UK as a whole, which saw a slightly quicker increase in permanent placements in August.

“Temporary staff billings across Scotland increased for the twenty-fourth successive month during August.

“Though solid, the rate of expansion eased to the slowest since January and was below its long-run average.

“The uptick in temp billings was in part attributed to increased activity at clients …

“August data highlighted a further reduction in the supply of permanent candidates across Scotland.

“The respective seasonally adjusted index has now posted below the neutral 50.0 threshold for the nineteenth month running.

“Acute skill and candidate shortages were linked to the latest decline.

“However, though the extent to which permanent staff availability contracted was the slowest in five months, it remained sharper than the UK-wide trend.”

Sebastian Burnside, Chief Economist at Royal Bank of Scotland, said: “Since April, growth in permanent placements had softened, and now the latest data finally recorded the first fall in permanent staff hires in 20 months during August.

“A loss of momentum was also observed for temp billings, which rose at the softest pace since January.

“The weaker trends were accompanied by reports that rising economic uncertainty had limited recruitment activity.

“Moreover, labour supply and demand imbalances persisted.

“Acute skill and labour shortages weighed on the availability of candidates, while demand for labour continued to rise, albeit not as quickly as earlier in the year.

“With firms competing for labour, this resulted in further steep increases in starting salaries and temp wages during August.”