The latest Royal Bank of Scotland Report on Jobs showed that salaries for new permanent hires rose “rapidly” across Scotland in March amid “a further sharp fall in the number of candidates” for vacancies.
“Competition for skilled staff, the cost-of-living crisis and labour shortages were said to have driven up salaries.” said the report.
“While the rate of inflation was stronger than the historical and UK-wide averages, the pace of growth was the softest seen in 23 months.
“March data pointed to a sharp rise in hourly wages for temporary workers across Scotland, thereby extending the current run of growth to 28 months.”
The report showed that a further drop in permanent labour supply was recorded across Scotland in March, stretching the current run of contraction to 26 months.
The rise in salaries came as the survey signalled a fall in permanent staff placements across Scotland for the second consecutive month in March.
“The reduction was fuelled by ongoing economic uncertainty, which resulted in increased hesitancy among companies to commit to new hires,” said the report.
“Additionally, temp billings fell for the sixth month running.
“In terms of labour supply, there was a further sharp fall in the number of candidates for permanent vacancies, while temp staff availability fell at the weakest pace in the current 25-month period of contraction.
“At the same time, growth of demand for permanent staff moderated in March, with vacancies rising at the slowest pace in just over two years.
“Furthermore, demand for temp workers contracted for the third consecutive month.
“In terms of pay, pressures on starting salaries and wages remained marked, partly due to the cost-of-living crisis, but also competition for workers amid ongoing labour shortages.”
Sebastian Burnside, Chief Economist at Royal Bank of Scotland, said: “March data revealed a further decline in hiring activity across Scotland, as ongoing economic uncertainty weighed on firms’ appetite for new staff.
“Moreover, with growth in permanent vacancies weakening further, and temp vacancies falling for the third month running, it appears unlikely that recruitment trends will improve much in the coming months.
“Nevertheless, despite the slowdown in hiring, pay pressures remained acute. This was in part fuelled by the cost-of-living crisis, but also increased competition for scarce candidates.”