Scottish recruitment firms recorded a fresh fall in permanent staff appointments during December, with declines now noted in four of the last five survey periods, according to the latest Royal Bank of Scotland Report on Jobs, compiled by S&P Global.

The rate of decrease was the most pronounced since April and sharp. Recruiters linked the reduction to heightened levels of economic uncertainty, which dampened employers’ and workers’ intentions to hire or seek out new roles.

Permanent staff appointments fell at a steeper rate across Scotland than that seen across the UK.

Meanwhile, December data pointed to a second consecutive monthly rise in billings received from the employment of temporary staff across Scotland. The rate of expansion, though mild, quickened from November. The latest rise was reportedly supported by increased demand for contract workers. Meanwhile, recruiters across the UK recorded a further fall in temp billings during December.

According to the report, permanent staff availability across Scotland fell in December, stretching the current decrease to 35 months. The pace of decline remained sharp despite easing to a three-month low. According to recruiters, fewer workers would risk a job move in the current economic climate.

At the same time, the report recorded a third consecutive monthly rise in temp candidate supply across Scotland in December. The respective seasonally adjusted index ticked up further from September to signal a sharp surge in temp staff supply overall. Recruiters often attributed the upturn to redundancies and the non-renewal of contracts.

When it comes to pay, salaries awarded to newly-placed permanent staff increased sharply across Scotland in December. The salary rise was said to have been primarily driven by candidate shortages. However, the rate of inflation moderated to a seven-month low and was weaker than both the historical and UK-wide averages.

The latest data also signalled a further rise in temporary wages across Scotland at the end of 2023. While the pace of increase eased for the second month running, it remained sharp overall and broadly in line with the long-run average. The latest upturn in temp pay was largely linked to the growing cost of living.

In terms of vacancies, Scottish recruiters registered a marked fall in permanent vacancies during December. Moreover, the rate of contraction was the strongest since November 2020.

Across the eight monitored sectors, blue-collar and engineering & construction recorded the joint-fastest falls in permanent vacancies. Meanwhile, nursing/medical/care defied the broader trend by reporting an upturn in permanent staff demand.

As has been the case since August, Scottish recruiters noted a fall in temp vacancies in December. Moreover, the rate of contraction was the most marked in three-and-a-half years.

Engineering & construction noted the quickest decline in short-term vacancies, followed by executive & professional.

Sebastian Burnside, chief economist at the Royal Bank of Scotland, said, “The Report on Jobs survey highlights that 2023 has generally been a weak year for the Scottish labour market, with permanent staff appointments rising in only three months of the year. Moreover, December recorded the most marked decline in permanent placements since April and one that was sharp overall, as employers were hesitant to commit to new hires amid lingering economic uncertainty, a theme also observed at the UK level. In contrast, temp billings continued to increase at the end of the year as businesses opted for more flexible employment arrangements.”

“The subdued economic environment and signs of further declines in vacancies suggest that hiring activity will remain weak as we head into 2024. However, softening demand conditions have led to slower rates of pay growth, especially for permanent starters’ salaries, helping to ease the pressure on employer’s budgets,” Burnside said.