Sebastian Burnside

Permanent placements rose for the seventh month in a row and at a quicker pace, while the rate of increase in temp billings remained close to a survey record, despite slowing on the month.

According to panellists, the further relaxation of COVID-19 restrictions and increased economic activity had boosted hiring activity. Subsequently, difficulties finding candidates persisted into the third quarter, as the supply of staff plummeted again, while vacancies continued to surge. This mismatch between demand and supply therefore placed further upwards pressure on rates of pay.

July data highlighted a sustained upturn in the number of permanent staff appointments across Scotland. Companies were expanding their workforces amid the easing of COVID-19 restrictions, according to respondents. Moreover, the rate of increase accelerated on the month to move closer to May’s recent peak and was substantial overall.

Permanent placements also rose at the UK level in July. Here, the upturn slowed from June’s record, but was still faster than that seen in Scotland.

Recruiters across Scotland signalled another increase in billings received from the employment of temporary workers during July, extending the current sequence of growth to 11 months. The rate of expansion was among the fastest on record and rapid, despite easing since June. Anecdotal evidence attributed the latest upturn in temp billings with the reopening of the economy and a subsequent surge in demand for staff.

Moreover, the rate of increase in Scotland outstripped the UK average for the third month running in July.

Recruitment agencies across Scotland highlighted a further fall in the availability of permanent candidates during July, extending the current sequence of reduction to six months. Heightened uncertainty among candidates stemming from the pandemic, as well as surging demand for staff, were cited by respondents as having driven the latest fall in candidate numbers. The rate of decline was the fastest since March 2019, although not as steep as that registered for the UK as a whole.

Shortages of staff also extended into short-term roles in July, with the supply of temporary candidates declining at the second-quickest rate on record (behind June 2021). Anecdotal evidence attributed the fall, which was rapid, to strong demand for staff, Brexit, and the government furlough scheme.

Pay inflation continued into July, as salaries awarded to permanent new joiners in Scotland increased for the eighth month in a row. A shortage of candidates and strong demand for workers led to the latest rise in salaries, according to respondents. Notably, the rate of inflation was the second-fastest on record (behind July 2014).

An eighth straight monthly increase in average hourly pay rates for short-term staff across Scotland was recorded in July. According to anecdotal evidence, strong demand for staff and a lack of available candidates had pushed up wages. The rate of inflation gathered pace from May and was among the steepest on record.

Temp pay also rose across the UK during July, with the rate of increase far outpacing that seen in Scotland.

The Permanent Vacancies Index is derived from eight sectoral indices of the demand for permanent staff at recruitment consultancies. The Index is a weighted average of the eight individual sector indices.

Recruiters across Scotland registered a sixth consecutive monthly rise in the number of permanent vacancies during July. Moreover, the rate of increase was only fractionally slower than June’s record pace and remained rapid overall.

The Temporary Vacancies Index is derived from eight sectoral indices of the demand for temporary staff at recruitment consultancies. The Index is a weighted average of the eight individual sector indices.

July data highlighted another rapid rise in the number of temporary vacancies across Scotland, with the respective seasonally adjusted index unchanged from June’s survey record. The rate of growth in Scotland was also quicker than that seen at the UK level.

Sebastian Burnside, chief economist at RBS, commented: “Latest data pointed to another strong month for the Scottish labour market, with hiring activity continuing to rise sharply for both permanent and temporary staff, and the rates of increase among the fastest recorded since the survey began in 2003.

“However, recruiters again noted challenges in finding candidates, as the supply of both short-term and permanent staff plummeted again amid reports of surging demand. Indeed, vacancies continued to rise rapidly, with the rates of increase for temporary positions highest on record and permanent staff second only to the rise witnessed in June.

“This mismatch between supply and demand is likely to pose further challenges in the months ahead, but overall, the labour market is in a good position, recouping any lost ground at a rapid pace, and hiring activity is showing little-signs of any considerable slowdown.”