Growing economic uncertainty has impacted hiring decisions and discouraged workers from seeking new roles, resulting in a fresh decline in permanent staff appointments across Scotland during December.

This is according to the latest Royal Bank of Scotland’s Report on Jobs, which is based on a monthly survey of around 70 Scots recruitment and employment consultants.

It found that the rate of decrease in permanent Scottish job placements last month was the most pronounced since April, and sharp. It also fell at a steeper rate in Scotland than what was seen across the UK as a whole.

On the other hand, December’s data pointed to a second consecutive monthly rise in temporary staff billings in Scotland, with the increase linked to heightened demand for contract workers.

The availability of permanent Scottish staff sharply fell, stretching the current period of decrease to 35 months, while there was a marked upturn in permanent staff availability at the UK level. Fewer workers were willing to risk a job move in the current economic climate, said the Scots recruiters.

Additionally, Scottish recruiters registered a notable fall in permanent vacancies during December, with the rate of contraction being the strongest since November 2020. Demand for permanent staff weakened at the UK level, but only marginally.

In terms of remuneration, salaries awarded to newly-placed permanent staff increased sharply across Scotland last month. Though the rate of inflation hit a seven-month low, the rise in salaries was primarily driven by candidate shortages.

Speaking on the report’s findings, Sebastian Burnside, chief economist at RBS, said: “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.

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“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.

“The subdued economic environment and signs of further declines in vacancies suggest that hiring activity will remain weak as we head into 2024. However, softening demand conditions have led to slower rates of pay growth, especially for permanent starters’ salaries, helping to ease the pressure on employer’s budgets.”