Candidate shortage drives Scots wages higher

The latest Royal Bank of Scotland Report on Jobs revealed “sharp and accelerated contractions” for both permanent job placements and temp billings in April “as lingering economic uncertainty impacted recruitment plans.”

At the same time, job candidate availability in Scotland fell further amid reports of general skills shortages and an “increased reluctance” among workers to take on new roles due to the prevailing economic climate.

The availability of permanent staff in Scotland contracted for the 27th successive month in April.

“Consequently, pay pressures continued to build in April, with both starting salary and temp wage inflation accelerating from March as firms bid higher to attract suitably-skilled candidates,” said the report.

“Lastly, growth of demand for permanent staff continued to cool, while temp vacancies fell for the fourth straight month.”

The number of permanent placements across Scotland fell for the third consecutive month in April.

The rate of contraction steepened from March.

Anecdotal evidence attributed the latest downturn to skill shortages as well as current economic uncertainty, which had led to greater caution among both clients and candidates.

The April data highlighted a marked rise in salaries awarded for new permanent jobs across Scotland.

The rise in new starter salaries across Scotland outpaced that seen for the UK as a whole.

Sebastian Burnside, Chief Economist at Royal Bank of Scotland, said: “The latest data revealed a further deterioration in the health of the Scottish jobs market in April, as recruiters registered reduced hiring activity for both permanent and temp staff.

“The drop in recruitment reflected current market conditions, as the uncertain economic climate was said to have weighed on firms’ hiring plans.

“Filling roles also remains difficult, as ongoing skill shortages and a further drop in overall candidate availability continue to limit recruiters’ abilities to match people with vacancies.

“Competition for scarce talent exerted further upward pressure on pay. Firms were willing to raise their offers in order to attract and secure candidates with the right skillset, with April data signalling sharp increases in both starting salaries and temp hourly wages.”