Scottish labour market well-positioned on back of hiring surge

The Scottish labour market saw a further rapid increase in hiring halfway through the second quarter, putting it “in good stead moving forward”, according to a report out today.

The latest Royal Bank of Scotland (RBS) Report on Jobs has found that permanent placements increased at the fastest pace on record, while the growth in temp billings was the most marked since June 2007, on the back of relaxing of lockdown restrictions and the reopening of some sectors.

The lender said that demand for both permanent and short-term staff rose at unprecedented rates during May, but candidate availability fell sharply, pushing up pay pressures. Permanent salaries rose at the fastest pace since December 2014, while the rate of temp wage inflation was the strongest for over more than years.

The number of permanent staff appointments in Scotland rose further during May, extending the current sequence of increase to five months, with the latest upturn the fastest since data collection began in January 2003.

Looser Covid-19 restrictions and the reopening of some sectors were seen as catalysing recruitment. Picture: Jane Barlow/PA Wire.

Turning to temporary billings, a ninth straight monthly improvement – the steepest jump for nearly 14 years – was seen across Scotland last month. Panellists attributed this to increased demand for staff due to the easing of pandemic-related restrictions in most areas.

“As was the case for permanent staff, Scotland registered a quicker increase in temp billings than the UK as a whole,” said RBS.

It added that May data highlighted another fall in the supply of permanent staff north of the Border, amid reports that candidates were reluctant to move jobs due to Covid-19, while the latest reduction in candidate availability was the quickest since March 2020 “and sharp”.

RBS chief economist Sebastian Burnside said 'a stellar performance in May puts the labour market in good stead'. Picture: Ian Jacobs.

The further reduction in the availability of temporary candidates in May extended the current sequence of decrease to three months, and at the fastest pace since January last year.

Competition

Salaries awarded to permanent new joiners in Scotland rose further in May, amid stronger competition for candidates, and with the latest increase the fastest since December 2014 and rapid overall. A smaller pool of potential workers also helped average hourly pay rates for short-term staff across Scotland head upwards during the month – which also saw the eighth successive monthly leap in the number of temporary vacancies.

RBS chief economist Sebastian Burnside said: “May data pointed to a further steep increase in hiring activity across Scotland as the easing of lockdown measures and subsequent reopening of sectors spurred on the economy and boosted demand for staff. A record rise in permanent placements and the steepest increase in temp billings since 2007 shows that the labour market is recovering well from the Covid-19 induced downturn last year.

“Further positive signs came from staff demand indices, which showed the strongest upturns in temp and permanent vacancies on record. Staff supply fell too, however, as lingering pandemic-related uncertainty left many candidates wary of switching roles. Nonetheless, a stellar performance in May puts the labour market in good stead moving forward, with the further easing of restrictions likely to provide another boost.”

RBS said last month that the Scottish private sector economy saw the fastest rate of growth for eight months in April as the recovery continued.

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