Hiring activity slump for Scottish firms in June

EMPLOYMENT: Starting salaries declined at quickest rate in 17 years

Hiring activity across Scotland continued to decline during June, according to a new Royal Bank of Scotland report.

The bank’s Report on Jobs, published today, shows both permanent staff appointments and temporary billings fell last month amid reports of further delays to hiring decisions.

Although rates of contraction did ease from May, they remained marked and among the quickest in the survey’s history.

At the same time, demand for staff continued to fall substantially. Reports of redundancies led to a sharp increase in candidate availability, which added further downward pressure on pay.

Starting salaries dropped at the quickest rate on record. June data highlighted another reduction in permanent placements across Scotland, extending the current sequence of decline to five months.

The pace of contraction softened notably from May but remained rapid overall and quicker than the pre-coronavirus record.

According to panellists, firms continued to postpone hiring decisions amid the Covid-19 pandemic.

By comparison, the fall in permanent placements at the UK level eased markedly since May and was slower than that recorded in Scotland.

Sebastian Burnside, chief economist at Royal Bank of Scotland, said: “Labour market conditions in Scotland remained weak during June, with the latest Report on Jobs data highlighting further marked reductions in both permanent placements and temporary billings. That said, the rates of decline did soften slightly as parts of the economy look to reopen as a result of easing lockdown restrictions.

“Meanwhile, vacancies continued to decline substantially, with the falls in both permanent and temporary vacancies surpassing their respective pre-coronavirus records despite softening from May.

“As demand for candidates dropped again, starting pay came under further pressure, with starting salaries declining at the sharpest rate in over 17 years of data collection.

“Overall the short-term outlook for the Scottish labour market remains extremely challenging with the biggest uncertainty being firms’ responses to the closure of the furlough scheme.”

Recruitment consultancies across Scotland signalled a fall in salaries awarded to permanent new joiners in June, as has been the case in each month since April. The rate of decline was the quickest recorded since the series began in January 2003 and rapid overall.

June data highlighted a further reduction in average hourly pay for short-term staff across Scotland