That said, there were signs of a shift towards permanent roles, as the rate of increase in permanent staff appointments accelerated to the second-fastest on record, while the latest upturn in temp billings was only mild.

Meanwhile, demand for staff remained historically elevated though the rates of vacancy growth cooled from December.

Nonetheless, candidate availability deteriorated rapidly again. As a result, there was further upwards pressure on pay. Notably, the rate of permanent starters’ salary inflation remained close to November’s all-time peak.

Recruiters across Scotland recorded a thirteenth successive monthly uplift in permanent placements during January. Panellists attributed the upturn to strong demand for staff and increased activity at Scottish companies. Moreover, the rate of expansion was the second-fastest on record, behind only August 2021, and rapid overall.

Scotland also recorded a quicker rise in permanent staff appointments than on average across the UK as a whole in January.

As has been the case in each month since September 2020, temp billings across Scotland rose in January. That said, the rate of increase eased further at the start of the year, with the upturn the weakest since 2016 and only mild overall. According to survey respondents, demand for temp staff was relatively subdued, and some candidates and firms expressed a preference for permanent roles.

Across the UK as a whole, temp billings rose at the quickest rate for four months, with the upturn markedly outpacing that in Scotland.
The supply of permanent staff across Scotland continued to fall in January, amid reports of strong demand for workers and skills shortages. The rate of decline eased sharply since December and was the slowest for eight months, albeit still marked by historical standards.

The rate of decrease in permanent staff supply in Scotland was also weaker than the UK-wide average in January.

Scottish recruiters signalled a further reduction in temp candidate availability during January, stretching the current sequence of decline to 11 months. IR35 changes, Brexit and COVID-19 were all cited as drivers of the latest fall, while there were also mentions that some candidates were switching to permanent roles due to strong demand. The rate of decline eased slightly on the month, but was nonetheless amongst the steepest on record and quicker than that seen across the UK as a whole.

January data highlighted a further rise in average salaries awarded to permanent new joiners across Scotland, extending the current sequence of increase to 14 months. Strong demand for staff, coupled with issues finding talent, drove the latest upturn, according to anecdotal evidence. Notably, the rate of salary inflation remained close to November’s peak, easing only slightly since December.

For the fourteenth time in as many months, average hourly pay rates for short-term staff across Scotland rose in January. Panellists attributed the latest increase to strong demand for staff. That said, the rate of increase was the slowest since last July, albeit still marked in the context of historical data.

As has been the case in each month since February 2021, recruiters in Scotland signalled an upturn in demand for permanent staff during January. Although marked and quicker than that recorded for the UK as a whole, the rate of vacancy growth in January was the slowest for nine months.

Across the monitored job categories, IT & Computing saw the steepest rise in vacancies, followed by Accounts & Financial.

January data highlighted a further rise in the number of temporary vacancies across Scotland, extending the current sequence of increase to 16 months. The rate of growth cooled further at the start of the year, however, with the latest upturn the weakest since last March, albeit still sharp by historical standards.

The IT & Computing sector registered the fastest rise in vacancies of the eight monitored sectors in January.

Sebastian Burnside, chief economist at RBS, commented: “The opening month of 2022 saw some shifting trends across the Scottish labour market. Permanent staff appointments increased at a near-record pace, with the latest upturn outstripping the UK-wide average by a notable margin.

“There was a different story for temporary staff, however, as the rate of increase in temp billings slowed and was only mild, with respondents noting that a number of candidates and firms were favouring permanent roles as confidence around the economic outlook strengthened.”

He added: “Meanwhile, rates of vacancy growth cooled slightly, and the supply of staff continued to decline steeply, for temp candidates in particular.

“Overall, the data suggests that the labour market remains on a strong footing as we head further into 2022, and any shift from short-term to permanent positions suggests firms are now more confident in the recovery and are pressing on with hiring plans to meet rising customer demand.”