Job candidate shortage worsens as recruitment falls

The latest Royal Bank of Scotland Report on Jobs survey has reported yet another “deterioration in permanent candidate availability” as it confirmed a drop in recruitment activity across Scotland at the start of 2024.

“A marked deterioration in permanent candidate availability was recorded in Scotland during January, thereby extending the current run of contraction to three years,” said the report.

“Moreover, the rate of decrease quickened from the previous survey period to the fastest since December 2022.

“Anecdotal evidence noted that reduced market confidence deterred candidates from seeking new job opportunities.”

The survey said both permanent staff placements and temp billings fell sharply in January, with the latter posting the first decline in three months.

Subdued levels of business activity and ongoing uncertainty around the outlook reportedly discouraged companies from taking on additional staff and made workers more hesitant to seek out new roles.

At the same time, vacancies fell at “marked and accelerated rates.”

On pay, subdued demand conditions contributed to the softest rise in starting salaries for nearly three years.

Meanwhile, temp wage inflation quickened, which was linked to the rising cost of living and reports of skills shortages.

“Scottish recruitment agencies recorded a second consecutive monthly decline in permanent placements during January,” said the report.

“The rate of contraction moderated from December but was sharp overall. Panellists linked the latest reduction to a decrease in business activity and lingering uncertainty over the outlook.

“Permanent staff appointments also fell at the UK level and at a stronger rate than observed in Scotland.”

Royal Bank of Scotland Chief Economist Sebastian Burnside said: “The health of the Scottish labour market weakened at the start of the year, with recruitment agencies revealing notable declines for both permanent placements and temp billings.

“The subdued economic climate, high costs and uncertainty over the year ahead all contributed to muted hiring activity at businesses.

“Starting salary inflation also moderated again in January, with pay awarded to permanent new joiners rising at the weakest pace in nearly three years.

“The downturn in hiring activity in Scotland reflected the trends seen across the UK as a whole, with many employers pausing recruitment decisions until the economic environment improves and market confidence revives.”