GROWTH in permanent staff appointments across Scotland accelerated in March to the second-sharpest pace on record, according to a survey which highlights the strength of the labour market.

The “growing imbalance between demand for staff and supply of labour resulted in further marked increases in starting pay”, the latest Royal Bank of Scotland Report on Jobs found.

It noted the steep and accelerated increases in both permanent placements and temporary roles amid reports of greater market confidence.

The latest rise in permanent starting salaries was the fastest on record, and March data signalled a sixteenth consecutive monthly rise in permanent starting salaries across Scotland.

The rate of growth quickened slightly since February and was the second-sharpest since the survey began in 2003, while the rate of growth in permanent appointments in Scotland outpaced the UK-wide average for a third consecutive month.

Anecdotal evidence suggested that stronger market conditions and a surge in client demand drove the latest increase in permanent placements.

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It comes against a backdrop of record UK job vacancies of 1.25 million,

Figures from the Office for National Statistics figures show that the number of people in employment in the UK is 32.5m, against 33.1m in the quarter prior to the pandemic.

Recruitment agencies linked higher starting salaries to efforts to attract candidates amid ongoing labour shortages.

Vacancies for permanent staff across Scotland expanded for the fourteenth successive month in March. The rate of growth was the quickest since last October.

The survey also found the the upturn in demand for permanent workers remained quicker than the UK-wide average. By sector, engineering and construction recorded the steepest increase in permanent vacancies, followed closely by IT and computing.

READ MORE: Tight labour market will not alleviate the squeeze on employee pay packets

Recruitment consultancies signalled an eighteenth straight monthly rise in temporary vacancies across Scotland. The rate of expansion was sharp, having accelerated to a three-month high, but was not as steep as that seen across the UK as a whole.

Recruiters indicated that the latest expansion was supported by rising business activity at clients as Covid-19 disruption subsided.

In contrast, temporary billings growth slowed to an 11-month low across the UK as a whole, and was not quite as sharp as that seen in Scotland.

The report said that recruiters across Scotland saw a “robust uplift” in hiring activity in March.

Sebastian Burnside, chief economist at Royal Bank of Scotland, said the data pointed to a further marked improvement in labour market conditions in March, fuelled by robust demand for staff.

“Permanent placements increased at the second-fastest rate on record, and temp billings growth quickened to the sharpest for five months,” said Mr Burnside.

“Furthermore, as overall demand for staff continued to increase, the data suggest that there will likely be further strong rises in recruitment activity in the months ahead.

"However, ongoing labour shortages do raise the question of how strong future increases in permanent placements and temp billings will be, as skill shortages limit firms’ ability to fill roles.

"Nevertheless, the competitive and tight labour market plays in favour of job seekers, with starting salary inflation hitting a fresh survey high in March.”

The report is compiled by S&P Global from responses to questionnaires sent to a panel of around 100 Scottish recruitment and employment consultancies.

Survey responses are collected in the second half of each month and indicate the direction of change compared to the previous month.