According to the latest Royal Bank of Scotland Report on Jobs, the Scottish labour market remained strong during February, with permanent staff appointments and temp billings both expanding. Although the rates of increase slowed in both cases, growth momentum was stronger than recorded for the UK as a whole. Furthermore, demand for temporary and permanent staff rose strongly, despite easing since January. Amid a further deterioration in labour supply, pay pressures remained elevated in February.

Latest survey data extended the current period of growth in permanent appointments in Scotland to 25 months. This contrasted with the UK, where permanent placements stagnated. However, the expansion in Scotland eased notably from the historically marked rates seen towards the end of 2018 and was only modest overall. It was also the slowest increase seen across the current sequence of growth.

Temp billings also rose further during February, although the rate of increase slowed. The expansion was strong overall, despite softening to the weakest since January 2018.

As has been apparent since March 2012, permanent staff availability in Scotland declined, albeit at a pace that was the softest in four months. Nevertheless, the fall was steep overall and markedly stronger than seen for the UK on average.

Short-term candidate supply in Scotland also deteriorated in February. However, the drop in availability was the weakest for almost one year. Temporary staff shortages were also apparent across the UK as a whole.

A healthy appetite for new hires in Scotland was signalled by further growth in demand for both permanent and temporary staff during the latest survey period. In each instance, however, vacancies expanded at softer rates. Permanent job openings increased at the weakest pace in just over two years, while growth in temporary roles was the slowest since January 2018 and below the long-run average.

Scottish recruitment agencies pointed to further growth in pay during February. Salaries awarded to permanent starters in Scotland rose sharply, despite the rate of inflation easing to the slowest since March 2017.

Short-term pay rates in Scotland also increased in the latest survey period, thereby extending the trend seen over the past four years. Though strong, the rate of temp wage inflation slowed to a six-month low.

Nick Stamenkovic, Senior Economist at Royal Bank of Scotland, commented on the latest report:

“The latest report was mixed. Permanent appointments slowed markedly in February, continuing the recent trend, but remain in positive territory. Temporary staff billings also slowed last month albeit modestly.

“However, vacancies for permanent staff continued to increase at a healthy pace in February whereas demand for temporary staff has clearly weakened recently, dropping below the long-term average. Supply-side constraints for permanent workers, evident since March 2012, show few signs of easing: the availability of permanent staff continued to shrink sharply in February, mirroring the trend in the rest of the UK.

“The upshot is that pay pressures for permanent staff have eased to their lowest level since March 2017, below the UK average, and to a lesser extent for temporary workers.
All in all, the Scottish labour market has lost a bit of momentum in early 2019 but remains strong, keeping upward pressure on pay. With inflation moderating, real incomes continue to improve, a key support for consumers.”

Download the full report here [PDF 585KB]

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