Hiring falls, salaries rise amid candidate shortages

Hiring activity fell across Scotland again in November amid candidate shortages, greater economic uncertainty and strong cost pressures, according to the latest Royal Bank of Scotland Report on Jobs survey.

The increased market uncertainty and candidate shortages were blamed for the latest drop in permanent staff appointments.

For the second month running, both permanent staff hires and temp billings fell, with the former recording the quickest reduction since June 2020.

While staff availability continued to deteriorate, demand for labour expanded at a softer, but still strong rate.

The ongoing imbalance of labour demand and supply led to further rises in both starting salaries and short-temp pay.

For the second successive month, permanent placements fell across Scotland in November.

The rate of reduction quickened from October to the fastest since the initial phase of the pandemic in June 2020 and was sharp overall.

November data highlighted a fall in temp billings across Scotland for the second consecutive month.

“As has been the case since February 2021, the supply of permanent staff across Scotland contracted during November,” said the report.

“Furthermore, the rate of deterioration was the most severe since May and among the fastest on record.

“Recruiters stated that a combination of labour and skill shortages, Brexit and economic uncertainty reduced the supply of candidates.

“Notably, the downturn in permanent staff supply across Scotland outstripped the UK average for the eighth month in a row.

“A twenty-first successive monthly fall in temporary candidates across Scotland was recorded during November.

“The rate of reduction accelerated on the month, and was the sharpest since June. The decline also exceeded that seen across the UK as a whole.

“Recruiters blamed the fall on a stronger preference for permanent roles, candidate shortages and economic uncertainty …

“Latest survey data signalled a further rise in salaries awarded to permanent new joiners in Scotland for the twenty-fourth successive month in November.

“The rate of pay inflation ticked up from October’s 16-month low, and was rapid overall. The latest rise in salaries was attributed to competition for labour amid staff and skill shortages.

“For the second month running, Scotland noted a quicker rise in starting salaries than recorded at the UK level.

“Average hourly wages increased further across Scotland in November, thereby stretching the current sequence of inflation to two years.

“The rate of pay growth accelerated from October’s 18-month low and was sharp overall. Scottish recruiters commonly noted that acute skill and candidate shortages continued to exert upward pressure on wages.”

Sebastian Burnside, Chief Economist at Royal Bank of Scotland, said: “Following the post-pandemic hiring boom, the latest Report on Jobs survey indicates that recruitment activity lost further momentum in November amid a slowdown across the economy.

“Greater uncertainty around the outlook and candidate shortages have taken a toll on staff hiring across Scotland. Latest data indicated a notably steeper contraction in permanent placements, while temp billings fell for the second consecutive month.

“At the same time, labour scarcity resulted in strong growth in pay, with both starting salaries and hourly wages rising at sharper rates during November.

“The steeper drop in candidate availability across Scotland, which was often blamed on a generally low unemployment rate, fewer foreign workers, worries over the economic climate and cost of living crisis, is likely to add further upwards pressure on pay in the months ahead, particularly if firms want to attract and secure the skilled workers they need.”