Mather rules out direct action on public sector jobs

Published on Saturday 3 May 2008 14:56

JIM Mather, the enterprise minister, has ruled out direct Government action to shrink Scotland's oversized public sector, despite claims that it is a drain on the economy.

In a move likely to disappoint business groups that have been calling for a large scale transfer of jobs from the public to private sector, Mather says the Government will not intervene directly to reduce the size of the state sector, which accounts for 23% of all Scottish jobs.

Groups including the Institute of Directors (IoD) in Scotland argue that the size of the sector is inhibiting long-term economic growth and want the Government to take active steps to ensure that more jobs are transferred to the "wealth creating" private sector.

But Mather told a gathering of business leaders in Edinburgh last week that the Government thinks the process should only happen "organically rather than imposing it from the top and getting a whole raft of unintended consequences".

While recognising that the size of the public sector is a problem, he indicated that Alex Salmond's Government is unlikely to take any steps to resolve the situation.

Instead, he argued, the Government is more interested in measures to help grow private enterprise. To that end, he is in discussions with the Irish Consul General for Scotland about the potential for collaboration between Irish and Scottish businesses.

David Watt, director of the IoD in Scotland, said the Government's approach was "astonishing". He said the SNP Government would be unable to meet its target of matching the UK growth rate by 2011 unless it was prepared to take bold action to remove the economic burden of Scotland's large number of public sector employees.

"They can't do that unless they get the workforce into the private sector and into wealth creation. It's astonishing to hear that they're letting that just happen.

"Surely they should be taking a lead on that? The private sector for quite a long time has almost unanimously felt that the public sector is too big and it's a drain on the economy."

The IoD warned that Scotland, with its ageing and declining population, will not have enough manpower in future to expand.

"We have a population challenge that people don't seem to face up to at all in terms of demography and age," said Watt.

However, a poll in The Scotsman last week showed that, overall, the SNP has impressed the Scottish business community since it came to power 12 months ago.