Sebastian Burnside

Permanent placements rose at a near-record pace, while the upturn in temp billings accelerated from January’s 17-month low and was sharp overall.

Demand for staff also picked up, with permanent vacancy growth hitting the fastest since last November and demand for temp staff also rising at a historically marked pace.

Subsequently, staff availability deteriorated further, with the rates of decline remaining rapid despite easing since January. Strong demand for workers placed further upwards pressure on rates of pay in February. The rate of starting salary inflation was the second-highest on record, while the latest uplift in short-term pay rates remained sharp.

February data highlighted a sustained upturn in permanent placements across Scotland, with the rate of increase little-changed from January and the third-highest on record. Strong demand for staff, in part due to improved client confidence, was attributed by respondents to the latest uplift.

Notably, Scotland continued to see a quicker rise in permanent placements than the UK-wide average in February.

An eighteenth straight monthly rise in temp billings across Scotland was recorded in February, amid reports that companies were beginning new projects and demanding additional staff. Moreover, the rate of increase picked up from January’s recent low and was sharp overall.

Across the UK as a whole, temp billings rose at a softer pace compared to January, though the upturn continued to outpace that seen in Scotland.

As has been the case in each of the past 13 months, the availability of permanent candidates across Scotland deteriorated in February. Anecdotal evidence linked the latest fall to skills shortages and a reluctance among workers to change roles due to uncertainty surrounding the pandemic.

Although still marked, the rate of decline in permanent staff supply was the weakest since last May and much softer than that at the UK level.

February data pointed to a further reduction in the supply of temp staff across Scotland, extending the current sequence of decline to a year. The rate of deterioration eased to a three-month low, but was nonetheless rapid in the context of historical data.

For the fifteenth time in as many months, average salaries awarded to permanent new starters across Scotland rose in February. Notably, the rate of inflation quickened for the first time in three months and was the second-fastest on record (behind November 2021). According to survey respondents, a shortage of suitable candidates had placed upwards pressure on pay.

The rate of salary inflation in Scotland was broadly in line with that recorded for the UK as a whole.

February data pointed to a further uplift in average hourly pay rates for short-term staff across Scotland, extending the current sequence of inflation that began in December 2020. Although still marked by historical standards, the latest increase was the slowest since last July and weaker than that seen across the UK as a whole.

A thirteenth successive monthly rise in the number of permanent vacancies was recorded in February. Moreover, the latest upturn was the quickest for three months and marked. The rate of increase in vacancies across Scotland also outpaced the UK-wide average.

IT & Computing recorded the fastest rise in demand for permanent staff across the monitored job categories, followed by Engineering & Construction.

As has been the case in each month since October 2020, recruiters across Scotland reported an upturn in demand for temp staff during February. The rate of increase accelerated from January’s 10-month low and was sharp, albeit still below the trend seen over 2021.

Across the monitored sectors, IT & Computing recorded the quickest uplift in temp vacancies and Executive & Professional the weakest.

Sebastian Burnside, chief economist at RBS, commented: “The Scottish labour market recorded a further strong uplift in hiring activity in February, as a further near-record rise in permanent staff appointments occurred alongside a sharp pick-up in temp billings.

“At the same time, candidate availability continued to decrease rapidly for both permanent and temp staff, albeit at softer rates than in January, while vacancy growth accelerated. Strong demand for scarce candidates subsequently led to further upwards pressures on pay.

“Midway through the first quarter of the year, the labour market remains in a strong position with no signs that momentum is cooling.”