Demand for jobs in Scotland jumps but labour squeeze inflates starting salaries - RBS

Scottish recruitment activity continues to rise sharply despite labour shortages, a key report today reveals.

Permanent placements last month increased at the second-fastest rate on record, according to the latest Royal Bank of Scotland Report on Jobs survey.

Permanent placements last month increased at the second-fastest rate on record, according to the latest Royal Bank of Scotland Report on Jobs survey.

Recruiters across Scotland saw another “robust” uplift in hiring activity in March.

Panellists noted steep and accelerated increases in both permanent placements and temp billings amid reports of greater market confidence and increased activity among clients.

However, a growing imbalance between demand for staff and supply of labour resulted in further marked increases in starting pay. Notably, the latest rise in permanent starting salaries was the fastest on record.

The report’s seasonally adjusted permanent placements index signalled a further rise in permanent staff appointments across Scotland last month. The rate of growth gathered pace slightly on February’s result and was the second-sharpest on record.

Anecdotal evidence suggested that stronger market conditions and a surge in client demand drove the latest increase in permanent placements. The rate of growth for Scotland outpaced the UK-wide average for the third consecutive month.

Recruiters across Scotland recorded a further uplift in temporary placements in March. Furthermore, the rate of growth gathered momentum, accelerating to a five-month high.

Recruiters indicated that the latest expansion was supported by rising business activity as Covid disruption subsided. In contrast, temp billings growth slowed to an 11-month low across the UK as a whole, and was not quite as sharp as that seen in Scotland.

The latest survey data indicated that the availability of permanent staff declined again in Scotland, thereby extending the current sequence of reduction that began in February 2021. The respective seasonally adjusted index posted well below the 50 no-change threshold, to signal a severe contraction that was the quickest for three months. Recruiters pointed to tight labour market conditions and acute skill shortages.

March data signalled a 16th consecutive monthly rise in permanent starting salaries across Scotland. The rate of increase was the fastest since the survey began in January 2003.

Recruitment agencies linked higher starting salaries to efforts to attract candidates amid the ongoing labour shortages.

The rate of salary inflation across the UK as a whole also hit a fresh survey high in March but remained slower than that seen in Scotland.

Sebastian Burnside, chief economist at Royal Bank of Scotland, said: “Latest survey data pointed to a further marked improvement in labour market conditions in March, fuelled by robust demand for staff. Permanent placements increased at the second-fastest rate on record, and temp billings growth quickened to the sharpest for five months.

“Furthermore, as overall demand for staff continued to increase, the data suggest that there will likely be further strong rises in recruitment activity in the months ahead. However, ongoing labour shortages do raise the question of how strong future increases in permanent placements and temp billings will be, as skill shortages limit firms’ ability to fill roles.

“Nevertheless, the competitive and tight labour market plays in favour of job seekers, with starting salary inflation hitting a fresh survey high in March.”

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