Jobs move out of state control
IT'S happened without anyone really noticing. Quietly, gradually, stealthily, there has been a significant reduction in the number of people working in Scotland's public sector.
At the same time, there has been a continued increase in the totals employed in the private sector north of the Border, according to the latest figures released by the Scottish Government.
If the trend identified over the past year continues, then Scotland will soon have more than two million people in the private sector for the first time, and continuing falls in the public sector.
The figures, released by the Scottish Government last week, show that the proportion of people employed in the state sector in Scotland is at its lowest level for six years. There were 575,700 people employed in the public sector – more than one in five people in the workforce – between July and September this year, down 6,100 since last year. The private sector north of the Border has seen a continuous rise in staff, from 1,911,800 in the third quarter of last year to 1,975,800 this year.
As the graphs on this page show, if this trend is maintained, the gap between the public and private sectors is likely to continue to widen, blunting the arguments of critics who say that Scotland relies too heavily on the public sector for employment. The trend revealed in the latest figures has been welcomed by economists as a demonstrating the strength of the Scottish economy and signalling the prospect of future growth.
According to an authoritative Bank of Scotland survey, the major increases in private-sector employment have been in business services – which include property, information technology, accountancy and legal services – as well as financial services, hotels and restaurants.
Martin Ellis, chief economist at Bank of Scotland, says: "Research shows the private sector tends to have higher productivity growth potential than the public sector.
"The shift towards a greater proportion of employees working in the private sector is therefore an encouraging sign and should help to provide a firm foundation for stronger economic growth in Scotland in the future."
The decline in the public-sector workforce is largely due to reductions in the number of employees in local government and the central civil service, probably in anticipation of the this year's tighter spending round.
However, those who are critical of Scotland's over-reliance on state employment will be able to point out that Scotland still lags behind the UK average in terms of the proportion of private sector jobs.
For the third quarter of this year, there were 5,770,000 people in the public sector in the UK as a whole, equivalent to 19.7 per cent of the workforce, with 23,521,000 in the private sector, 80.3 per cent.
The figure of 77.4 per cent in the private sector and 22.6 per cent in the public sector north of the Border shows that Scotland still trails the UK average in the size of the state and its effect on jobs.
However, Scotland's the proportion of people in the public sector in Scotland is falling more rapidly than the UK average.
It has dropped 1.2 per cent from the high of 23.8 per cent in the fourth quarter of 2005. The UK figure has dropped 0.6 per cent from a high of 20.3 in fourth quarter of 2005 to 19.7 per cent in the third quarter of this year.
John Swinney, the cabinet secretary for finance, points out that the figures improve the Scottish Government's commitment to providing better value for taxpayers' money.
Swinney, who has admitted the public sector in Scotland is likely to contract over the next four years, says: "The Scottish Government is determined to simplify the public sector and focus resources on improved delivery of frontline services. Good government has to be about results and value for money."
He adds: "The Government is focused on ensuring we have more front-line staff delivering better public services and increasingly efficient backroom functions. This is what we are working to achieve and this will be a good result for Scottish taxpayers."
According to the figures, the total numbers in the public service is 47,500 up since the third quarter of 1999, a 9 per cent rise. But over the same period, private sector employment has increased by 191,000 people, a rise of 10.7 per cent.
Using "full-time equivalent" figures, there were 229,700 people working in local government in the third quarter of this year. This included 57,700 teachers and 35,800 other education staff. There were also 43,600 social work staff and 92,600 other staff.
The transfer of staff providing central services to the Scottish police forces to the new Scottish Police Services Authority (SPSA) has meant that a large number of staff who were previously employed by police boards are now classified as being employed by a non-departmental government body.
Over the year, there has been a reduction of 2.4 per cent in police and related staff, a result of the movement of staff to the SPSA.
Permanent full-time equivalent employment in the core Scottish Government departments, excluding arm's-length agencies, was down by 0.9 per cent since last year, but up by 12.1 per cent since 1999.
Liam McArthur, the Liberal Democrats' finance spokesman, says: "The trend is towards a greater proportion of the workforce being employed by the private sector, a trend set to continue now that the SNP have abandoned their plans to recruit 1,000 additional police.
"What we need to try and do is support the business community in creating jobs, while at the same time recognising the important role of the public sector in promoting sustainable economic growth."
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