Scots job candidate shortage drives wages higher

The availability of candidates to fill permanent job roles in Scotland decreased again during September – stretching the current period of decline that began in February 2021, according to the latest Royal Bank of Scotland Report on Jobs survey.

“Recruitment consultancies noted that generally tight labour market conditions and skills shortages had weighed on candidate numbers,” said the report.

Recruiters based in Scotland also signalled a further fall in temporary staff supply during September, continuing a trend which has been apparent for over two years.

“Moreover, the rate of contraction was the quickest in three months and was strong in the context of historical data,” said the report.

“Recruitment agencies often highlighted an increased reluctance among workers to move roles amid concerns over job security.”

The report noted a marked rise in salaries for permanent workers.

“September data pointed to a rise in salaries awarded to permanent new joiners across Scotland,” said the report.

“Moreover, the upturn was the fastest since June and marked overall. According to anecdotal evidence, stronger competition for skilled labour pushed up starting pay.

“Permanent starters’ pay also rose at the UK level, though the rate of increase remained softer than that seen for Scotland.”

The report showed that both permanent staff appointments and temp billings contracted sharply in September.

“Panellists linked reduced hiring activity to fewer vacancies, weaker confidence around the outlook, and shortages of suitably-skilled candidates that made it harder to fill any outstanding roles,” the report said.

“Notably, demand for staff weakened again, while the supply of both permanent and temp candidates deteriorated in September, with some workers hesitant to move roles given lingering uncertainty around the economic outlook.

“As a result, competition for skilled and scarce labour led to further increases in starting pay.

“Trends diverged, however, as permanent salaries grew at the sharpest pace since June, while temp wage inflation slipped to a three-month low and was modest overall.”

Royal Bank of Scotland chief economist said: “Recruitment activity across the Scottish labour market deteriorated as the third quarter drew to a close.

“Both permanent staff appointments and temp billings fell at sharp rates, with panellists linking the reductions to candidate shortages and falling demand for labour amid concerns over the wider economic climate.

“Uncertainty around the outlook also meant that workers were more hesitant to risk a job move, leading to further falls in staff availability.

“Moreover, ongoing candidate shortages and the increasing cost of living prompted employers to raise their pay offer to attract and secure workers.”