One of the many major issues which an independent Scotland would have to address is the extent to which the Scottish economy is dependent on public spending and in particular the number of public sector jobs which would be moved from Scotland to England for strategic reasons (for example, nuclear submarines), because Scotland could not afford to fund them (for example, troops) or the repatriation of public sector jobs which service England but which were moved to Scotland to provide employment there (for example, the administration of much of English social security).
In the first quarter of 2010 Scottish Government employment figures were:
2,427,000 Total employment in Scotland
1,816,800 in Private sector employment comprising 74.9% of employment
610,200 Public sector employment comprising 25.1% of employment
This compares with 20.1% of English GDP being public sector.
A quarter of employment in the public sector is daunting enough, but the distinction between public and private is increasingly blurred. If the directly employed public employees and private employers largely or wholly dependent on public funding are included the numbers rise substantially, viz:
“Research by Manchester University shows the total figure climbed from 603,773 in 1998 to 772,048 in 2007.
The sharp growth can be explained by the researchers combining the number of people directly employed in the public sector with the number indirectly employed in the “para state” sector where private employers depend on state support.
The “para state” includes everything from consultants working for private companies to people involved in rubbish collection, healthcare and nursery education and other jobs
where the funding is dependent on the Government.
The report claims the UK has an “undisclosed business model of using publicly supported employment to cover the continuing failure of the private sector to generate welfare through job creation”. http://www.heraldscotland.com/news/home-news/one-third-of-scots-work-in-public-sector-1.1003448
However the 2007 figure does not include the banking jobs which became public after the bail-out of RBS and HBOS another 36,000 can be added taking the total to over 800,000 the Scottish dependent on public funding . That constitutes 30% of total Scottish employment.
The independent Scottish Item Club (http://www.ey.com/UK/en/Issues/Business-environment/Financial-markets-and-economy/Economic-Outlook—What-is-ITEM-Club)
2010 report highlighted the dangerous reliance of the Scottish economy on
public funding: “
‘ Scotland‘s second major hurdle is its dependency on the public sector. The public sector has contributed to over 30% of Scotland’s GDP growth over the last 10 years, compared to just 20% in the rest of the UK.
Scottish ITEM Club says that the impending squeeze on public sector spending
will have a disproportionate impact on Scotland’s economic recovery.
Dougie Adams[ senior economic advisor to the Ernst & Young Scottish ITEM Club] comments: “Although there is scope for productivity and efficiency improvements to be made to Scotland’s public sector, which may help to mitigate some of the impact of future spending cuts, a decline or slow down in public sector output will significantly hamper Scotland’s economic performance over the next few years.”
While the extent of any budgetary cuts remains unclear, recent forecasts suggest that Scotland won’t see a return to 2009 levels of public sector spending before 2020, such is the scale of the retrenchment. This will inevitably have a knock on impact on jobs; Scottish ITEM Club predicts that public sector employment in Scotland will decline by around 30,000 over the next four years.’ (http://www.ey.com/UK/en/Newsroom/News-releases/Item—10-06-06—Scottish-ITEM-Club-summer-2010-forecast).
Scottish public sector employment is divided between the devolved (that which is the responsibility of Scotland) and the reserved (that which arises from the powers
which have not been devolved). The breakdown of the two is as follows:
Chart 4: Breakdown of devolved public sector employment by sector, Headcount, Q1 2010 http://www.scotland.gov.uk/Publications/2010/06/15171937/5
Chart 5: Breakdown of reserved public sector employment by sector, Headcount, Q1 2010 http://www.scotland.gov.uk/Publications/2010/06/15171937/6
Chart 6: Breakdown of devolved civil service employment, Scotland, Headcount, Q1 2010 http://www.scotland.gov.uk/Publications/2010/06/15171937/7
Chart 7: Breakdown of reserved civil service employment, Scotland, Headcount, Q1 2010
How much of Scotland’s public sector employment would vanish if independence occurred? This is impossible to exactly quantify because the unknown factor is what Scotland would be willing and able to fund. Nonetheless, Scotland would definitely lose the jobs which serviced England and items such as the nuclear submarine facility at Faslane and would have to substantially reduce the number of jobs serving