The Scottish labour market saw a further drop in hiring activity during May, according to the latest RBS Report on Jobs.
Lingering economic uncertainty continued to discourage both workers and firms alike, although the latest survey signalled a softer downturn in permanent placements, as some recruiters were able to fill long-standing vacancies and organise hires for new projects.
Demand trends weakened, with growth in permanent vacancies slipping to a 27-month low, and temporary vacancies falling for the fifth straight month. As a result, pay pressures showed signs of easing in May.
For the fourth successive month, Scottish recruiters registered a drop in permanent staff appointments in May. According to anecdotal evidence, employers were less confident in the economic outlook, which dampened overall hiring activity.
That said, the rate of contraction was the softest in this sequence and only marginal, as some recruiters noted the fulfilment of long-standing vacancies and the initiation of new projects.
Temp billings fell markedly across Scotland in May, extending the current run of reduction to eight months. The pace of contraction accelerated from April and was the strongest since February.
Respondents widely linked the drop in temp billings to a lack of available work, while there were also mentions that the additional bank holiday weighed on staff hiring.
Permanent candidate availability across Scotland continued to worsen in May, the 28th consecutive month that a fall has been recorded. A reluctance among workers to change or seek out new roles due to uncertainty over the economic outlook was widely blamed for the latest downturn.
For the 27th month in a row, temporary staff availability in Scotland fell in May. The seasonally adjusted index indicated the quickest contraction in three months. According to recruiters, a preference among workers for permanent roles had reduced the pool of available candidates.
As has been the case since December 2020, average starting salaries awarded to candidates in permanent roles rose in Scotland midway through the second quarter. Increased efforts to secure talent drove the latest upturn in pay, anecdotal evidence suggested.
Hourly pay rates for temp workers across Scotland rose during the latest survey period. The respective seasonally adjusted index fell slightly after having hit a three-month high in April, but continued to signal a sharp rise in pay overall.
The latest survey data signalled a solid rise in demand for permanent staff in Scotland. IT and computing registered the strongest increase in permanent vacancies across the monitored sectors, followed by nursing, medical and care.
However, similar to the trend observed at the UK level, overall growth of demand across Scotland cooled as permanent job openings grew at the softest pace in 27 months.
Demand for temporary workers fell solidly in Scotland during May, with the rate of decrease accelerating from that seen in April. This extended the current run of contraction to five months.
At the sector level, engineering and construction and executive and professional reported the strongest decreases in temp vacancies.
Sebastian Burnside, chief economist at RBS, commented: “Labour market conditions across Scotland continue to cool as economic uncertainty weighed on hiring activity and limited worker movement.
“At the same time, growth of demand for permanent workers weakened, while temp vacancies dropped further.
“In terms of pay, starting salaries and hourly wages rose as firms increased their pay offers to secure high calibre workers, but in line with the weaker demand trends, latest data signalled an easing of overall pay pressures, with both starting salary and hourly wage inflation moderating in May.“
He added: “It's worth noting that the downturn in permanent placements eased notably on the month.
“There were some reports of successful recruitment which helped soften the pace of decline, providing some encouragement.“
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