Scottish workers have been awarded the biggest pay increases in the public sector, outstripping the rest of the UK.

Figures from the Institute for Fiscal Studies (IFS) showed that since 2019, public sector pay in Scotland has risen by 5% in real terms, while there has been no growth elsewhere in the nation.

In the past few years, the Scottish government and councils have agreed deals for school and NHS staff, as well as in other parts of the devolved public sector, that are bigger than those handed out in other parts of the UK.

The fourth chapter of IFS’s third annual Scottish Budget report, ‘Scottish public sector employment and pay’, highlighted that newly qualified teachers earn £33,594 annually in Scotland, compared with £31,650 in most parts of England (6.1% more), while newly qualified nurses are paid an average of £31,892 in Scotland, while in most of England they receive £29,970 (6.4% more).

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According to the data, 22% of the Scottish workforce – around 590,000 people – are employed in the public sector. This is lower than in Northern Ireland and Wales, where these figures are 26% and 24% respectively. However, it is higher than the 17% reported in England and higher than any English region.

The study also showed that employment in the public sector is up 11%, by 56,000, since 2017. In that period, public sector hiring has increased more quickly in Scotland than any other part of the UK, except Wales.

While pay for these workers has increased, so too has the number of employees, thereby also substantially increasing Scotland’s public sector wage bill.

IFS warned that while prioritising pay in the sector is “a reasonable choice” by Scottish policymakers, the higher pay bill of £27 billion a year in Scotland makes up more than half of all devolved day-to-day spending and poses an increasing financial challenge for the Scottish government.

The body insisted it must now find the money for pay increases for its bigger and better-paid workforce from its own devolved revenues and/or less spending elsewhere.

In addition, it said that the benefits of higher public sector pay are unclear. While the Scottish public sector has greater staff retention than in England, the gap has been narrowing and there is “no obvious evidence that larger increases in pay in Scotland have helped retain workers”.

There is also no data to support any positive effects of pay rises on recruitment or motivation.

Jonathan Cribb, associate director at IFS and an author of the chapter, said: “Scotland has not only increased the number of public sector workers more quickly than other parts of the UK, it has also increased their pay more quickly. While these are reasonable priorities for Scotland, it adds to the Scottish government’s fiscal challenges, given that funding from the UK government will not reflect these Scotland-specific decisions.

‘It’s not obvious from the available data that higher public sector pay growth has delivered benefits in terms of improved staff retention. The Scottish government should undertake or commission research to understand better the impacts of its pay policies, and consider targeting future increases in pay where there is clearest evidence of recruitment, retention or motivation problems.”

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