Scots labour market 'in good position' after gaining further momentum

Scottish labour market conditions continued to strengthen last month, “recouping any lost ground at a rapid pace”, according to a report on jobs published today by Royal Bank of Scotland (RBS).

Permanent placements rose for the seventh month in a row and at a quicker pace, while the rate of increase in temporary billings stayed close to a survey record, despite slowing on the month.

Respondents to the survey said the further relaxation of Covid-19 restrictions and increased economic activity had boosted hiring. Subsequently, difficulties finding candidates persisted into the third quarter, as the supply of staff fell again, while vacancies continued to surge. This combination led to further upwards pressure on rates of pay.

July data highlighted a sustained upturn in the number of permanent staff appointments across Scotland, with the permanent placements index reaching 64.3. Companies were expanding their workforces amid the easing of coronavirus restrictions, according to respondents. “Moreover, the rate of increase accelerated on the month to move closer to May's recent peak, and was substantial overall,” RBS said.

This mismatch between supply and demand is likely to pose further challenges, according to RBS. Picture: Daniel Leal-Olivas/AFP via Getty Images.

Recruiters across Scotland signalled another increase in billings received from the employment of temporary workers during July, extending the current sequence of growth to 11 months. The temporary billings index came in at 65 and the rate of expansion was among the fastest on record – and fast.

Recruitment agencies across Scotland highlighted a further fall in the availability of permanent candidates in July, extending the current sequence of reduction to six months. The rate of decline was the fastest since March 2019.

Pay inflation continued into July, as salaries awarded to permanent new joiners in Scotland jump for the eighth month in a row. A shortage of candidates and strong demand for workers led to the latest rise in salaries, and the rate of inflation was the second-fastest on record.

An eighth straight monthly increase in average hourly pay rates for short-term staff across Scotland was recorded last month. According to anecdotal evidence, strong demand for staff and a lack of available candidates had driven up wages. The rate of inflation gathered pace from May and was among the steepest on record. Temporary pay also rose across the UK, with the rate of increase far outpacing that seen in Scotland.

Robust

RBS chief economist Sebastian Burnside said: “Latest data pointed to another strong month for the Scottish labour market, with hiring activity continuing to rise sharply for both permanent and temporary staff, and the rates of increase among the fastest recorded since the survey began in 2003.

“However, recruiters again noted challenges in finding candidates, as the supply of both short-term and permanent staff plummeted again amid reports of surging demand. Indeed, vacancies continued to rise rapidly, with the rates of increase for temporary positions highest on record and permanent staff second only to the rise witnessed in June.

“This mismatch between supply and demand is likely to pose further challenges in the months ahead, but overall, the labour market is in a good position, recouping any lost ground at a rapid pace, and hiring activity is showing little signs of any considerable slowdown.”

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