Scottish jobs market settles as demand for staff eases

Scotlandís tight recruitment market showed signs of settling in January. Underlying demand for both permanent and temporary staff continued to rise, but at the most modest rates for nineteen months. Rates of growth in permanent staff placements and temporary staff billings were down from the high rates recorded during most of 2004. However, the availability of staff to fill permanent and temporary vacancies continues to fall.

Summary for January 2005
The reportís unique ëBarometerí pointed to an eighteenth consecutive month of improving conditions in the Scottish jobs market. Although the jobs market continues to strengthen, the rate of growth was the lowest since February2004, and was below the UK average.

All four components of the barometer continued to exert positive influences, however the contributions of each were slightly down on the previous month.

A slowdown was recorded in the growth of staff appointments during January, while demand for staff and average pay rates rose at less marked rates than in the previous month. The rate of deterioration in candidate availability eased slightly..

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

ìThe Scottish labour market continued to grow in January but there are signs that recruitment activity has slowed in the New Year. For the month staff placements grew at the lowest rate since mid 2003. However the jobs market is still tight, and salaries continue to rise, due to skills shortages.î

Regional analysis - ëAberdeen recorded strongest recruitment activity í

The strongest growth of permanent staff placements was recorded in Aberdeen. Glasgow also posted a sharp expansion. In Dundee and Edinburgh the number of placements fell from the previous month.

Aberdeen also registered the most marked rise in temporary/contract staff billings. Meanwhile, billings rose in Glasgow, but fell in Dundee and Edinburgh.

Permanent staff availability declined in all four of Scotlandís main cities with the sharpest decline seen in Edinburgh. Temp staff availability also fell in all four with the fastest rates of deterioration recorded in Dundee and Aberdeen.

The strongest growth in pay rates for both permanent and temp staff was again seen in Glasgow. Meanwhile, temp staff pay rates were reported to have fallen in Edinburgh.


Wages and salaries - ëPay rates continue to rise í

Persistent skill shortages amongst available candidates contributed to a further rise in average pay rates as firms looked to attract suitably qualified staff. However, inflationary pressure was moderated by slower growth of demand for staff.

However, the growth rates of permanent salaries were the lowest in nearly a year, while temporary/contract staff pay rates rose at the slowest pace in eighteen months.

Employment - ëRecruitment activity slowed í
Permanent staff placements in Scotland grew at the slowest pace in seventeen months and were below the UK average for the first time in six months.

Temp staff billings grew at the slowest pace in twenty months. Growth rates were just below the UK average.

Vacancies - ëWeakest growth of demand for staff in nineteen monthsí

Demand for permanent staff continued to rise, but growth rates were the weakest in nineteen months. Growth in Scotland continued to lag behind the UK average.

Growth of demand for temporary staff also eased to the slowest rate in nineteen months, and was below the average for the UK overall.

The availability of candidates to fill permanent vacancies continued to fall at a rate close to Decemberís two-year record pace. The availability of temporary/contract staff also declined at a sharp rate.

Sectoral- ëDemand for permanent staff rose in most sectors during Januaryí

In January, recruitment consultancies reported stronger demand for all types of permanent employees, apart from Secretarial & Clerical staff. Demand for temp staff rose in six categories, with only Secretarial & Clerical staff and Engineering & Construction staff recording weaker demand than in the previous month.

The strongest improvement in demand (for both permanent and temporary staff) was again seen for Nursing/Medical/Care staff.

The Bank of Scotland Labour Market Barometer
A key tool in the Monthly Labour Market Report is the Bank of Scotland Labour Market Barometer. The Barometer is a composite indicator devised from four key measures: demand for staff; employment (appointments); availability for work; and pay in the permanent and temporary markets.

The Barometer remained above the 50.0 no-change mark (to signal improvement of job market conditions) for the eighteenth consecutive month in January. However, a fall in the barometer, from 58.0 to 56.1, suggested that the rate of improvement was the lowest in eleven months.

The latest fall in the barometer was the third in succession. All four components provided weaker positive contributions to the barometer in January, led by a marked slowing in growth of staff appointments.

The Barometer for Scotland remained below the equivalent UK index (compiled from data produced in the Deloitte/REC Report on Jobs) for the third month in a row.

UK regional labour market summary
In Scotland, the number of people registered as jobless and seeking work continued to fall. Official data showed that the claimant count was 87,900 in December, down 1,100 from the previous month. This equated to 3.3% of the working population, down 0.1% from November.

The number of people registered as unemployed and looking for work at UK job centres fell to 826,300 in December, from Novemberís downwardly revised figure of 832,500.

The lowest unemployment rate was found in the South East (at 1.5%), followed by the South West (at 1.6%). Meanwhile, the highest unemployment rates were again seen in Northern Ireland and the North East (at 3.6% and 3.8% respectively).