The report’s data comes after surveying around 70 Scottish recruitment and employment agencies helping to fill vacancies for companies in sectors such as IT and computing, engineering and construction, and more.

Specifically, the latest iteration of the monthly report uncovered that there was a renewed fall in permanent placements across Scotland in August, despite the brief rise in July.

Further, the rate of the contraction was the strongest since April, with surveyed recruiters linking the reduction to weaker economic conditions and a shortage of skilled and desirable candidates.

That said, there was also a downturn in permanent staff appointments at a UK level — and the decline was much quicker than that seen in Scotland.

The data from August also revealed a deterioration in permanent candidate availability in Scotland, continuing the current run of decrease that began in February 2021, with the rate of contraction picking up from July and being the highest seen in eight months.

The RBS report noted that increased hesitancy among people to move roles amid the current economic climate as well as skill shortages were linked to the latest reduction in permanent labour supply.

The downturn seen in Scotland is in direct contrast to the rapid increase in permanent candidate numbers at a UK level.

There was also a drop in the number of permanent vacancies in Scotland following a two-and-a-half-year period of expansion, though the report stipulated that the contraction was modest.

In the UK as a whole, growth of demand for permanent labour cooled, with vacancies rising just fractionally overall.

Amid Scottish firms’ bids to secure skilled and needed talent, salaries awarded to new permanent joiners continued to increase during August, extending the current sequence of pay growth that began in December 2020.

In particular, Scotland recorded a stronger rate of growth in permanent salaries compared to the UK-wide trend.

Speaking on these findings, Sebastian Burnside, the chief economist at Royal Bank of Scotland, said: “The latest survey data highlighted renewed weakness across the Scottish labour market.

“A smaller pool of desirable and skilled candidates and the muted economic climate meant that hiring activity remained subdued during August, with both permanent placements and temp billings falling sharply. Moreover, fewer work opportunities translated into a reduction in permanent vacancies.

“Nonetheless, both starting salaries and wages continued to rise at historically strong rates. Competition for scarce and skilled candidates often meant that firms had to pay more to secure the right talent.

“Going forward, with fewer vacancies in the market, and firms already limiting their hiring, the survey suggests a weaker outlook for the Scottish labour market in the remaining months of 2023.”

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The most recent survey’s data — and what it potentially means for the rest of the year — comes amid the ongoing economic uncertainty faced by Scottish, UK, and global businesses alike.

However, DIGIT reported on the news last week that across the UK, tech businesses are growing in confidence about their economic prospects, in spite of external pressure such as high inflation, rising interest rates, and a pressurised skills and hiring market.

Specifically, IT consultancy businesses — including software developers and consultants providing technical support — reported a marked improvement across most metrics, such as overall performance, whereas businesses in many other sectors like retail and hospitality are gloomier about their prospects.