Permanent and temporary staff recruitment fell in January, report finds

Recruitment activity in Scotland fell at the start of 2024, according to a report.

A Royal Bank of Scotland (RBS) study found permanent staff placements and temporary jobs fell steeply in January, marking the first decline in temporary posts in three months.

The bank said lower business activity and “ongoing uncertainty around the outlook” appear to have discouraged businesses from hiring staff and made workers more hesitant about finding new roles.

In terms of pay, subdued demand conditions contributed to the softest rise in starting salaries in almost three years, with temporary staff wage inflation quickening.

This was linked to the cost-of-living crisis and reports of skills shortages.

The bank said Scottish recruitment agencies reported a second consecutive monthly decline in permanent placements in January.

Permanent staff appointments also fell across the whole of the UK, at a stronger rate than in Scotland.

There was a deterioration in permanent candidate availability in January throughout Scotland.

In contrast, an 11th successive monthly expansion in permanent staff supply was seen at the UK level in January, although the rate of growth slowed, RBS said.

The rate of growth did soften to a four-month low, however.

Sebastian Burnside, chief economist at RBS, said: “The health of the Scottish labour market weakened at the start of the year, with recruitment agencies revealing notable declines for both permanent placements and temp billings.

“The subdued economic climate, high costs and uncertainty over the year ahead all contributed to muted hiring activity at businesses.

“Starting salary inflation also moderated again in January, with pay awarded to permanent new joiners rising at the weakest pace in nearly three years.

“The downturn in hiring activity in Scotland reflected the trends seen across the UK as a whole, with many employers pausing recruitment decisions until the economic environment improves and market confidence revives.”

The report found that while candidate shortages fuelled higher starting salaries in Scotland, the rate of inflation moderated again during January.

The rate of pay growth was the weakest in nearly three years and slower than the historical average.

The rate of salary inflation at the UK level also moderated in January, but remained quicker than that seen in Scotland.

All monitored job sectors recorded a fall in permanent vacancies in January, other than the nursing, medical and care sectors.

Executive and professional roles led the decline, RBS said.