A NEW report published today reveals a further substantial drop in hiring activity among Scottish businesses during June. The Bank of Scotland Jobs report shows vacancies continued to decline at substantial rate, and that permanent starting salaries dropped at the quickest pace on record.

Both permanent staff appointments and temporary billings fell amid reports of further delays to hiring decisions. Although rates of contraction did ease from May, they remained marked and among the quickest in the survey’s history.

At the same time, demand for staff continued to dip. Reports of redundancies led to a sharp increase in candidate availability, which added further downward pressure on pay.

June data highlighted another reduction in permanent placements across Scotland, extending the current sequence of decline to five months. The pace of contraction softened notably from May but remained rapid overall and quicker than the pre-coronavirus record the report says. According to panellists, firms continued to postpone hiring decisions amid the Covid-19 pandemic. By comparison, the fall in permanent placements at UK level eased markedly from May and was slower than that recorded in Scotland.

Recruitment consultancies across Scotland recorded a seventh consecutive monthly reduction in temporary billings during June. Panellists frequently linked the reduction to the coronavirus pandemic and subsequent dip in demand for staff. The rate of decline eased to the slowest since February, but was nonetheless sharp overall.

The permanent labour supply, meanwhile, increased for first time in more than eight years.

Latest data highlighted the first rise in permanent candidate availability since February 2012, and the rate of increase was the quickest since August 2009 and steep overall, with panellists commonly reporting Covid-19-induced redundancies.

Recruiters in Scotland signalled a further increase in the availability of temporary candidates, stretching the current sequence of expansion to three months. Anecdotal evidence linked the increase to a high number of employee lay-offs and contract terminations, leaving candidates searching for work. The latest uptick was the fastest for just over 11 years. Fastest reduction in permanent starting salaries on record. Recruitment consultancies have signalled a fall in permanent new joiner salaries in each month since April. The rate of decline in June was the quickest recorded since the series began in January 2003.

June data also highlighted a further reduction in average hourly pay for short-term staff across Scotland.

The number of permanent vacancies has fallen in each of the past four months and demand for temporary staff fell further during June. The rate of decline softened from May, but remained marked and continued to outpace the pre-coronavirus record, the report said.

Sebastian Burnside, chief economist at Royal Bank of Scotland, said: “Labour market conditions in Scotland remained weak during June and vacancies continued to decline substantially.

“As demand for candidates dropped again, starting pay came under further pressure, with starting salaries declining at the sharpest rate in over 17 years of data collection.

“Overall the short-term outlook for the Scottish labour market remains extremely challenging with the biggest uncertainty being firms’ responses to the closure of the furlough scheme.”