A new report from the UK’s Institute for Fiscal Studies (IFS) shows there were 585,000 public sector workers in Scotland in 2024, representing 22% of the workforce.

This percentage is lower than in Wales (24%) and Northern Ireland (26%), but higher than in England (17%).

Median hourly pay in the public sector in Scotland was almost 5% higher than that for the UK as a whole in 2024.

“The cost of remunerating those employed by the Scottish Government and councils – who make up 92% of all public sector workers in Scotland – is around £27 billion this year, more than half of all devolved day-to-day public spending,” said the IFS.

The report said public sector employment in Scotland has risen significantly since 2017 — it grew by 56,000 (11%) from 2017 to 2024.

“The latest data, from September 2024, show that there were 585,000 public sector workers in Scotland,” said the report.

“Most of these are employed by either the Scottish Government or councils, but there are around 50,000 employed directly by the UK government, most of whom work for HM Forces or the UK civil service …

“From a peak of 586,000 in early 2009, public sector employment fell rapidly between 2009 and 2013, reaching 536,000 in early 2013 (a fall of 9%).

“Since the end of 2017, public sector employment has grown significantly (including throughout the COVID-19 pandemic), by 56,000 (11%), to reach its current level, which is almost identical to the previous peak in 2009.”

The report concluded: “The higher levels of public sector pay present a fiscal challenge for the Scottish Government, especially if it wants to align with (or exceed) the pay increases implemented by the UK government while starting from a higher baseline level of both employment and pay.

“We have not identified any clear trend in retention in the public sector in Scotland that could plausibly be related to higher pay. There may well be other effects that are hard for us, as analysts outside government, to observe.

“In addition, the Scottish Government’s public sector pay policy explicitly includes distributional concerns, encouraging employers to consider a ‘progressive approach to pay’, highlighting that delivery of public services is not the only consideration when setting pay …

“Whether or not these pay rises have had positive effects on public service delivery to date, given the cost of across-the-board pay rises the Scottish Government should consider targeting pay rises strategically, focusing on occupations where recruitment and retention challenges are most acute.

“As with its income tax policies, which have increasingly diverged from those in the rest of the UK, it should also commit to evaluating the impact of its public sector pay policies on recruitment, retention and productivity, making data available to researchers as necessary.”