Candidate shortage boosts starting salaries, vacancies

The ongoing shortage of candidates continues to have a huge impact on the Scottish job recruitment market — causing a sharp increase in starting salaries and a growing number of permanent job vacancies.

The rate at which starting salaries increased across Scotland in June outpaced the UK-wide average.

According to the latest Royal Bank of Scotland Report on Jobs survey, hiring activity fell again across Scotland during June as candidate shortages dampened recruitment.

Recruiters signalled a further rise in vacancies at the end of the second quarter.

The upturn in demand for permanent staff was the strongest in six months, corresponding with the sharper rate of growth in starting salaries.

Additionally, temp vacancies increased for the first time since December 2022.

However, candidate availability continued to deteriorate, with temp staff supply falling at a sharper rate than that seen for permanent workers.

“Recruitment consultancies across Scotland signalled a strong decrease in the number of candidates available for permanent jobs during June,” said the report.

“Though much softer than the average recorded over the current 29-month sequence of contraction, the pace of decline was the strongest in three months.

“Recruiters noted that skill shortages and lingering market uncertainty had impacted candidate numbers.

“Additionally, the trend seen in Scotland compared to the UK as a whole continued to diverge, as candidate availability improved at the UK level and at the quickest pace in two-and-a-half years …

“Permanent starting salaries increased again across Scotland at the end of the second quarter. The rate of growth quickened from May’s 27-month low and was historically sharp overall.

“According to panellists, shortages of skilled candidates and competition for labour drove up pay.

“The rate at which starting salaries increased across Scotland outpaced the UK-wide average.

“Scottish recruitment agencies signalled a rise in temp pay rates in June, thereby stretching the current run of inflation to 31 months …

“Demand for permanent staff increased across Scotland in June. Moreover, after having slowed for 13 months straight, the rate of expansion accelerated at the end of the quarter and outpaced that seen at the UK level.

“Supporting the upturn were sharp rises in permanent vacancies across IT & Computing and Blue Collar sectors.”

Royal Bank of Scotland Chief Economist Sebastian Burnside said: “The latest recruitment survey data for Scotland pointed to further falls in hiring activity across both permanent and temporary jobs markets at the end of the second quarter.

“Permanent staff appointments fell solidly, while the downturn in temp billings eased but remained historically marked, with panel members linking weakness to the subdued economic climate and hesitancy to commit to new hires.

“Despite vacancies increasing, and notably a fresh rise in temp vacancies, this caution around the outlook combined with candidate shortages meant that recruiters struggled to fill roles.

“A tight labour market also meant that firms raised their starting salaries and wages further in order to attract suitable candidates.”