New bank staff should not get ‘absurd’ salaries says top economist

A world leading economist has said that Scotland’s new investment bank should not offer “absurd” salaries but rather should attract talented people through the “honour” of working for it.

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Professor Mariana Mazzucato of University College London told MSPs yesterday that instead of offering salaries on a par with Edinburgh’s financial services sector, working for the new Scottish National Investment Bank should be reframed as an “honour” as it was a “wonderful experiment” which could transform the country’s public sector.

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Speaking at Holyrood’s economy committee, which is scrutinising the Scottish Government’s Bill for the creation of the new national bank, Professor Mazzucato said if the aim of the bank was to be “mission-orientated” then it would attract people to it.

“We need to re-frame what the public sector is for, to really attract some of the top talent we have in our societies - and the bank is a good way to do that,” she said.

“The bank is a wonderful experiment in Scotland precisely to see what its like to transform our imagination of what the public sector is for. I don’t think you need to match the, what I find often absurd, salaries of the banking sector - although you won’t attract people with investment and sectoral and scientific expertise if you’re under paying them. But if you really are a mission-orientated bank I believe you will attract people who want to make a difference in the world.”

Mazzucato, who sits on the Scottish Government’s panel of economic advisors, said that salaries should be “somewhere in the middle” between civil servant pay grades and the private financial sector.

But she added: “I have been working on the concept of missions for more than a decade - there’s a concept of mission mystique, of the honour of working for a mission orientated agency.

“Many public sector workers are under paid, but you have to make sure that the remit of the bank is really ambitious, so that it will be an honour to work in that bank and historically that has served well in bringing in high level expertise to government organisations.

“But when you have a training of public servants which has led to the idea that ‘you’re just there to fix a market failure’, well would you rather go take risks and be a creative actor creating value or just facilitating, enabling and fixing market failures? You’d probably choose the first.”

The Scottish Government published the Bill for the proposed development of a Scottish National Investment Bank earlier this year, with the expectation that it will boost Scottish productivity and growth.
Mazzucato also said it was vital the bank focus on social enterprises and charities as investment opportunities.