Scottish pay growth outpaces rest of UK

Growth of permanent staff salaries in Scotland again outpaced the UK average in May, according to the latest Bank of Scotland Labour Market Report. Recruitment consultancies based in Scotland took advantage of strengthened demand for staff to place a rising number of candidates. Permanent staff placements rose for the tenth successive month, with the rate of growth at the fastest pace since the survey began in January 2003.


Summary for May 2004

The rate of improvement in job market conditions in Scotland, as signalled by the reportís unique ëbarometerí, hit a new series high in May and continued to close in on the UK average.

Permanent staff placements rose for the tenth consecutive month in May and the rate of growth in Scotland was stronger than the UK growth rate for the first time in more than a year.

Of Scotlandís four largest cities, Edinburgh recorded the sharpest rise in permanent staff placements in May, followed by Aberdeen.

Recruitment agencies in Scotland reported that billings received from the employment of temporary and contract staff rose strongly in May.

Strong demand for staff and deteriorating candidate availability pushed salaries awarded to people starting new jobs higher in May, whilst temporary staff pay rates recorded the sharpest increase for four months.

Commenting, Tim Crawford, Group Economist at Bank of Scotland, said:

ìThe Bank of Scotland Monthly Labour Market Report points to a further substantial rise in the number of jobs being created by businesses in Scotland. Higher placements continue to deplete the pool of available candidates and skill shortages are becoming increasingly widespread. This means that employers are willing to offer substantially higher salaries to attract the right staff.î


Regional analysis
ëSalaries rise across Scotlandís four main citiesí

Edinburgh continued to record the sharpest increase in the number of people placed in permanent jobs by recruitment consultancies in May, followed by Aberdeen. Permanent staff placements in Glasgow were also markedly higher than in the previous month. Only in Dundee was the overall number of people placed in permanent jobs lower than a month earlier.

Average starting salaries awarded to people taking up new positions across Scotlandís four main cities all continued to rise in May. The strongest improvement was recorded in Aberdeen, closely followed by Glasgow. Meanwhile, Edinburgh saw the sharpest increase in temporary staff hourly pay rates, in part a reflection of acute skill shortages in the city.


Wages and salaries
ëWidening skill shortages push pay rates higherí

The dual effects of strong demand for staff and growing skill shortages again exerted upward pressure on pay rates in May.

Average salaries awarded to people starting new jobs rose for the eleventh month running in May, and at a faster rate than the UK average.

Growth of temporary/contract staff hourly pay rates also remained buoyant in May, with the rate of increase accelerating to a four-month high.


Employment
ëPermanent staff placements rise at faster rateí

The number of people placed in permanent jobs by recruitment consultancies in Scotland rose for the tenth successive month in May. Furthermore, with the seasonally adjusted index rising to 59.4, the rate of growth of placements was the fastest since the survey began in January 2003.

Average weekly billings received from the employment of temporary and contract staff in Scotland increased strongly again in May -- the fifteenth consecutive monthly rise. Moreover, an increase in the seasonally adjusted index to 59.8, from 56.4 in April, indicated that the rate of increase in billings was the fastest since last November.


Vacancies
ëSharp increase in demand for staffí

In a reflection of improved business confidence, the number of permanent positions that employers are seeking to fill rose in Scotland for the twelfth consecutive month in May. Moreover, at 63.5, the seasonally adjusted index of permanent staff vacancies rose to its highest level since the series began in January 2003.

Meanwhile, vacancies aimed specifically at temporary and contract staff rose for the fifteenth month running in May, largely in response to a marked increase in workloads at clients. Furthermore, at 64.4, the rate of growth of demand for temporary staff, signalled by the seasonally adjusted index of temporary staff vacancies, was the fastest yet recorded in the seventeen-month history of the survey.

The availability of candidates to fill vacant permanent positions at employers was found to have deteriorated in May for the third month in a row. Meanwhile, the availability of temporary staff fell for the thirteenth successive month. As a result, consultancies noted widening skill shortages for a range of trades.


Sectoral
ëDemand rises for all main categories of employeeí

Recruitment consultancies continued to report broad-based growth of demand for all main types of employee in May.

For permanent staff, the greatest increase in demand was recorded for IT/Computing staff, followed by Executive/Professional staff.

Demand for Blue Collar workers remained the strongest of all main categories of temporary employment, followed by Engineering/Construction staff.

UK regional labour market summary

In Scotland, the number of people registered as unemployed at job centres fell by 700 to 95,100 in April -- its lowest level since August 1975. Despite this decline, the unemployment rate was unchanged at 3.6% and was on a par with that seen in London.

The number of people officially registered as jobless and seeking work at UK job centres fell by 6,000 to 876,300 -- equivalent to 2.9% of the working population.

The lowest unemployment rates continued to be found in the South East and South West (1.7% for both regions). Meanwhile, the highest unemployment rates were located in the North East (4.3%), followed by Northern Ireland (4.0%).

The information in this report is directly comparable with the Deloitte/REC Report on Jobs survey for the UK, which uses an identical methodology. The Deloitte/REC index for the UK has a strong track record of accurately anticipating changes in unemployment, employment and average earnings. Visit www.ntc-research.com for further information.