This contraction, the most moderate in three months, coincides with a steep decline in job vacancies and a sustained decrease in permanent candidate availability, suggesting a reluctance among individuals to change roles amidst economic uncertainty.

Turning to pay, starting salaries and temp wages rose for the thirty-fifth month running in October. According to panellists, clients raised their pay offers due to efforts to secure scarce and suitably-skilled candidates.

Decline in permanent placements softens

Permanent staff placements continued to fall across Scotland in October. The rate of contraction was the weakest in the current three-month sequence of decline, however, and only modest overall. According to anecdotal evidence, weaker demand for staff drove the latest reduction.

The number of people placed into permanent job roles also contracted at the UK level, and at a sharper pace than that recorded in Scotland.

Billings received from the employment of short-term staff decreased across Scotland in October, thereby stretching the current period of decline to just over a year. Despite ticking up to a three-month high, the respective seasonally adjusted index indicated a solid reduction in billings overall.

The downturn in temp billings across Scotland contrasted with a marginal increase at the UK level.

Sustained deterioration in permanent candidate availability

Permanent candidate availability contracted rapidly across Scotland during October, thereby extending the current sequence of deterioration that began in February 2021. The rate of reduction quickened from September and remained faster than the series average. Recruiters commonly noted reluctance among potential candidates to move roles given the uncertain economic climate.

In contrast, a rapid and accelerated expansion in permanent staff supply was recorded across the UK as a whole.

For the first time since February 2021, Scottish recruiters signalled a rise in temp staff supply during October. According to anecdotal evidence, recruiters noted that clients had a reduced preference for contingent workers, which helped free up temporary labour. That said, the rate of expansion was mild overall, and muted when compared to the UK-wide average, in part reflecting hesitancy among workers to seek new roles.

Rapid rise in permanent starting salaries

Salaries paid to newly-placed permanent staff in Scotland continued to increase at a marked pace in October. The rate of permanent salary inflation remained historically elevated and outpaced the UK-wide average for the fifth successive month. Survey respondents linked higher salaries to ongoing candidate shortages and efforts to attract suitably-skilled staff.

October data highlighted a sharp rise in contract pay across Scotland, thereby extending the current run of wage inflation to nearly three years. Moreover, the rate of increase quickened from September and was the strongest since May.

The rate of temp wage growth across Scotland outstripped that recorded for the UK as a whole.

Demand for permanent staff deteriorates in October

A third consecutive monthly contraction in permanent vacancies was reported across Scotland in October. Demand for permanent staff deteriorated sharply, and at a pace that was the most pronounced since December 2020.

The strongest fall in vacancies was recorded across Secretarial & Clerical, followed by Executive & Professional.

Recruiters based in Scotland recorded a steep contraction in demand for temp staff in October. Moreover, the downturn was the quickest in 39 months. Meanwhile, temp vacancies grew at the UK level, though at a moderate pace.

Across the eight monitored job categories, Engineering & Construction posted the strongest reduction in temp vacancies, followed by Executive & Professional.

Sebastian Burnside, chief economist at Royal Bank of Scotland, commented: “The latest data highlighted ongoing weakness across the Scottish jobs market. Hiring activity was cutback, with recruiters noting softer demand for both permanent and temporary staff in October.

“Moreover, souring demand for labour could lead to further reductions in recruitment in the months ahead. The data therefore suggest that the post-lockdown hiring boom is long over, and that increased uncertainty surrounding the economic climate is weighing on business decisions and candidate movement.

“Another prominent feature of the survey is skills shortages, which make it difficult for employers to fill roles. As a result, pay pressures remain elevated by historical standards, as clients have to raise their starting salaries and wages in order to attract and secure suitable staff.”