THE Scottish labour market is losing momentum thanks to the economic slowdown, a Bank of Scotland report warns with both permanent and temporary staff billings falling in December.
The Bank of Scotland Labour Market Barometer, a composite indicator taking account of staff demand, employment, availability for work and pay, registered just 50.3 in December, down from 51.4, where anything over 50 signals growth.
Donald MacRae, chief economist at Bank of Scotland, said: "The labour market is showing the negative effects of the slowdown in the Scottish economy.
"The barometer, although still just positive and indicating a marginal improvement in December, is at its lowest for over a year.
"Growth in the number of job vacancies slowed while the number of people appointed to jobs fell for the first time in 15 months.
"The Scottish economy is struggling to maintain momentum in the face of the global slowdown."
The number of people placed into permanent positions fell for the first time in 15 months. Temporary staff billings dropped for the second consecutive month.
Edinburgh was the only city to report an increase in permanent staff placements while Aberdeen was the only area where temporary billings rose.
Pay for permanent and temporary staff rose only "marginally".
The report found that Scotland is following a similar trend to the UK as a whole, where staff placements also fell.
There is little sign of a let-up in pressure after economists in the Ernst & Young ITEM Club warned the UK economy is probably already in recession and is likely to "flatline" for the rest of 2011, in part due to the eurozone crisis.
Its report, compiled using the Treasury's model of the UK economy, forecasts gross domestic product growth of just 0.2% this year before accelerating to 1.8% in 2013.
Peter Spencer, chief economic adviser to the Ernst & Young ITEM Club, said: "Figures for the last quarter of 2011 and the first quarter of this year are likely to show that we are back in recession and we are going to have to wait until this summer before there are any signs of improvement."
Unemployment, is at a 17-year-high of 2.64 million, according to official figures published last month. The ITEM Club expects it to peak at close to 3m in the first half of 2013, some 9.3% of the UK's labour force, as the private sector finds itself unable to absorb people made redundant in state spending cuts.
Jim Bishop, Scotland senior partner at Ernst & Young, said: "Many of our companies still rely heavily on their eurozone trading partners, but this is no time for business as usual; they need to assess their long-term business models and adapt for new markets."
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