By Kristy Dorsey

Permanent salaries and short-term wages remained under sustained pressure in July as the rising number of Scottish jobseekers far outweighed the demand for staff.

Although the overall pace of the downturn in labour market conditions softened compared to June, the Report on Jobs produced by the Royal Bank of Scotland found that the reduction in permanent appointments and temporary billings remained substantial. The report, based on a survey of approximately 100 recruitment and employment consultancies, pointed to continued uncertainty among employers despite looser lockdown restrictions.

At 40.9, the seasonally-adjusted gauge of permanent placements during July improved from June’s reading of 28.3, but was still significantly below the neutral 50.0 mark dividing decline from growth. This trend was similar across the UK, although the fall in Scotland outpaced that at a national level.

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The number of candidates seeking a permanent job rose for the second month in a row, driven by redundancies as a result of the pandemic. Although the rate of expansion slowed from 67.9 in June, July’s 64.8 reading remains among the quickest on record.

Temporary billings posted their eighth successive monthly drop, though July’s 43.5 reading was the softest fall recorded since January. But the supply of temporary workers rose at the fastest rate seen since the financial crash in April 2009, with July’s reading shooting up to 86.9 against 81.8 the previous month.

Amid intense competition for available posts, salaries for new permanent hires fell for the fourth month in a row (41.8). Wages for temporary workers also fell for the fourth consecutive month (39.0), continuing the trend since lockdown took full effect in April.

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Sebastian Burnside, chief economist at Royal Bank of Scotland, said the data highlight the “immensely challenging conditions” in the labour market at present.

“Although there were frequent mentions that looser restrictions around the Covid-19 pandemic has allowed businesses to re-open, substantial uncertainty and excess capacity is stifling firms’ appetite to take on additional staff,” he said.

“Where they do, feisty competition among candidates for roles is driving pay down further, as both permanent salaries and short-term wages declined markedly again.”

Demand for permanent staff improved from 21.0 in June to 34.8 in July, while that for temporary workers went from 27.7 to 42.9. Both were driven by the need for blue collar workers, while secretarial, clerical, accounting, financial and executive candidates were in least demand.