Scotland defies UK employment trend and sees solid permanent jobs growth

Sebastian Burnside, Chief Economist at Royal Bank of Scotland
Sebastian Burnside, Chief Economist at Royal Bank of Scotland

According to the latest Royal Bank of Scotland Report on Jobs, there were further positive signs for Scotland’s labour market during May, with permanent placements rising amid declines across the UK as a whole.

Temp billings also grew at an accelerated rate, while pay pressures remained elevated. That said, permanent staff demand increased at the weakest pace since January 2017, while temp vacancy growth remained weaker than seen during last year.

Permanent staff appointments continued to increase in Scotland, sustaining the current upturn that started in February 2017. Furthermore, the rise was broadly in line with the series long-run average, showing further signs of recovery from the soft patch seen at the start of the year. This was a marked contrast to the trend seen for the UK overall, which showed a third successive monthly decline in permanent placements.

Temp billings in Scotland rose at a sharp and accelerated pace during May, growing above the long-run trend rate and outpacing that seen for the UK as a whole.

Labour supply continued to deteriorate in Scotland during the latest survey period. The rate of decline was the most pronounced for permanent staff. The fall in permanent candidate numbers was sharp overall, albeit the weakest for one-and-a-half years. Meanwhile, short-term staff supply contracted at the second-weakest rate since January 2018.

By historical standards, salaries awarded to permanent new joiners in Scotland increased strongly during May, broadly matching the UK-wide trend. That said, the rate of salary inflation was little-changed from those seen since February and was notably weaker than the 2018 average.

Wage rates for short-term staff increased sharply during the latest survey period, with the pace of increase holding close to April’s seven-month high.

Permanent and short-term job openings across Scotland increased in May and at much quicker rates than for the UK overall. That said, growth in both cases was subdued relative to those seen throughout last year. Permanent staff demand increased at the weakest rate for nearly two-and-a-half years. Temporary vacancy growth did improve following April’s 15-month low, but only marginally.

Sebastian Burnside, Chief Economist at Royal Bank of Scotland, said:

“Latest survey data revealed a mixed picture for Scotland’s labour market. The positive takeaways remain on the hiring front, where Scotland defied the downturn in recruitment at the wider UK level and posted a solid rise in both temp billings and permanent appointments.

“However, although both staff demand and pay pressures remain historically elevated, rates of increase were softer than 2018 averages, beckoning the question as to whether Scotland’s resilience can be sustained in the coming months.”

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