The number of people in Scotland starting new full-time jobs fell last month at the fastest pace recorded since April as growing economic uncertainty weighed on hiring decisions and discouraged workers from seeking new roles.

The latest Report on Jobs out today from the Royal Bank of Scotland also found that despite waning demand among employers, a shortage of suitable candidates continued to push up starting salaries. However, the rate of inflation "eased notably" from November.

Wage growth among temporary workers also softened as billings for temp workers rose further.

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Sebastian Burnside, chief economist at the Royal Bank of Scotland, said the subdued economic environment and signs of further declines in vacancies suggest that hiring activity will remain weak heading into 2024. However, slower rates of pay growth - particularly for permanent starters’ salaries - should ease the pressure on employer’s budgets.

“The Report on Jobs survey highlights that 2023 has generally been a weak year for the Scottish labour market, with permanent staff appointments rising in only three months of the year," he said.

"Moreover, December recorded the most marked decline in permanent placements since April and one that was sharp overall, as employers were hesitant to commit to new hires amid lingering economic uncertainty – a theme also observed at the UK level. In contrast, temp billings continued to increase at the end of the year as businesses opted for more flexible employment arrangements."

Permanent staff appointments fell at a steeper rate in Scotland than across the UK as a whole. The rise in billings received from the employment of temporary staff in Scotland contrasted with a decline at UK level.

The fall in the availability of permanent staff in Scotland extended the current period of decrease to 35 months. The pace of decline was said to have remained "sharp" despite easing to a three-month low.

Meanwhile, increasing numbers of redundancies and the non-renewal of contracts were cited in the third consecutive monthly rise in the supply of temporary candidates. 

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There was also a "marked fall" in permanent vacancies during December with the rate of contraction the strongest since November 2020. 

Across the eight monitored sectors, blue collar and engineering & construction recorded the joint-fastest falls in permanent vacancies. The nursing, medical and care sector defied the broader trend by reporting an upturn in permanent staff demand. 

Temporary vacancies declined for the fifth month in a row, with the rate of contraction the most marked in three-and-a-half years.