RBS: Scottish recruitment activity continues to rise sharply despite labour shortages

RBS: Scottish recruitment activity continues to rise sharply despite labour shortages

Sebastian Burnside

Recruiters across Scotland saw another robust uplift in hiring activity in March, according to the latest Royal Bank of Scotland Report on Jobs survey.

Panellists noted steep and accelerated increases in both permanent placements and temp billings amid reports of greater market confidence and increased activity at clients. However, the 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 seasonally adjusted Permanent Placements Index signalled a further rise in permanent staff appointments across Scotland in March. The rate of growth quickened slightly since February and was the second-sharpest on record. Anecdotal evidence suggested that stronger market conditions and surge in client demand drove the latest increase in permanent placements. Notably, the rate of growth outpaced the UK-wide average for the third consecutive month.



Recruiters across Scotland recorded a further uplift in temporary billings in March. Furthermore, the rate of growth gathered momentum, accelerating to a five-month high, and was sharp overall. Recruiters indicated that the latest expansion was supported by rising business activity at clients as COVID-19 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.

Latest survey data indicated that the availability of permanent staff declined again in Scotland during March, thereby extending the current sequence of reduction that began in February 2021. The respective seasonally adjusted index posted well below the 50.0 no-change threshold, to signal a severe contraction that was the quickest for three months. Recruiters often commented on tight labour market conditions and acute skill shortages when explaining the latest fall. That said, the rate of decline in Scotland remained softer than that seen across the UK as a whole.

The supply of short-term staff across Scotland fell for the thirteenth month running in March. Recruiters blamed the latest decrease in availability to a generally low unemployment rate and reluctance among some workers to seek new roles. However, the respective seasonally adjusted index signalled the slowest rate of deterioration since April 2021, as the pace of decline eased for the third successive month. Furthermore, the latest fall in temp candidate numbers across Scotland was not as sharp as the UK-wide average.

March data signalled a sixteenth consecutive monthly rise in permanent starting salaries across Scotland. Moreover, the rate of increase was the fastest since the survey began in January 2003 and marked. Recruitment agencies linked higher starting salaries to efforts to attract candidates amid ongoing labour shortages.

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

Latest survey data highlighted a rise in temporary staff wages in Scotland in March. Furthermore, the rate of inflation quickened to a three-month high and was sharp overall. Anecdotal evidence suggested that short-term pay increased as part of efforts to attract applicants. The rate of wage growth in Scotland was only slightly softer than that seen at the UK level.

Vacancies for permanent staff across Scotland expanded for the fourteenth successive month in March. The rate of growth was the quickest since last October and marked overall. Furthermore, the upturn in demand for permanent workers remained quicker than the UK-wide average.

By sector, Engineering & Construction recorded the steepest increase in permanent vacancies, followed closely by IT & Computing.

Recruitment consultancies signalled an eighteenth straight monthly rise in temp vacancies across Scotland. The rate of expansion was sharp, having accelerated to a three-month high, but was not as steep as that seen across the UK as a whole.

All monitored job sectors reported a stronger increase in temp vacancies in March. IT & Computing topped the rankings, followed by Engineering & Construction.

Sebastian Burnside, chief economist at Royal Bank of Scotland, commented: “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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