SCOTLAND’S labour market is “full steam ahead,” with an unprecedented surge in hiring activity during August, according to a new report.

The latest Royal Bank of Scotland Report on Jobs found that recruitment for both permanent and temporary roles rose at the fastest rates in the survey’s 18-year history.

Firms are stepping up hiring efforts as COVID-19 restrictions ease. But some people were still wary of moving roles, the bank said, and the pandemic, Brexit and strong demand were also contributing to candidate shortages.

The Royal Bank of Scotland Report on Jobs is based on a monthly survey of around 100 recruitment and employment consultants and has been running since January 2003.

“Staff shortages were again widely reported by panellists, with the supply of candidates falling rapidly again,” said Royal Bank of Scotland chief economist Sebastian Burnside.

“At the same time, vacancies expanded at the quickest rates ever seen, while pay for both permanent and short-term staff also hit fresh survey peaks.

“This mismatch between demand and supply is likely to pose further challenges in the coming months, but for now, the Scottish labour market is full-steam ahead.”

The number of permanent staff appointments across Scotland increased for the eighth month running during August, at the quickest rate in the survey’s history, the bank said. Recruiters link this to the easing of COVID-19 restrictions and strong demand for staff.

Permanent placements across the UK also rose in August at the fastest rate on record and “slightly faster than in Scotland,” RBS said.

In temporary billings, Scotland outstripped the UK average by “a sizeable margin,” with record high growth. “Strong demand for staff amid the easing of lockdown measures drove the latest upturn,” the bank added.

Availability of permanent candidates in Scotland, though, fell at its fastest rate for seven years, clocking up the second-fastest on record for the survey.

“Uncertainty and a subsequent reluctance to seek new roles, COVID, Brexit and strong demand for staff were all cited by panellists as drivers of the latest decline,” the bank said.

This is the seventh month in a row that permanent candidate availability has fallen.

The supply of temporary candidates has also been falling since March and in August declined at its fastest rate on record.

“Strong demand for staff meant that shortages were becoming more pronounced, according to anecdotal evidence,” RBS said.

Staff shortages are fuelling unprecedented rises in pay. Salaries awarded to permanent new joiners across Scotland rose at their fastest rate on record in August, marking a ninth successive month of increases.

Average hourly pay for short-term staff across Scotland also rose in August at its fastest rate on record.

“Temporary wages across Scotland have now risen in each month since last December,” the bank said. Recruiters attributed the latest increase in temporary pay to “supply and demand pressures” and IR35 regulations – tax rules for people who work as contractors.

As staff supply falls, demand from recruiters is also soaring.

“Demand for permanent candidates strengthened to a degree unseen in the survey’s near 19-year history, with the rate of increase also outstripping that seen at the UK level,” RBS said.

IT and computing registered the strongest rise in permanent vacancies across the monitored sectors, followed by engineering and construction.

Demand for temporary staff in Scotland rose for the 11th month in a row.

“Blue collar again saw the fastest overall increase, followed by hotel and catering,” the bank said.