It is common knowledge that the public sector is facing a big squeeze. According to the latest figures from the Office for Budget Responsibility, between 2011 and 2017 the UK will see the loss of 730,000 public sector jobs. Although this will have a massive effect nationwide, there are concerns that a shrinking public sector will have an even great effect on Scotland.
Traditionally, a higher proportion of Scotland’s economy has depended on the public sector than in other parts of the UK. In terms of public expenditure (as a percentage of GDP), the difference between Scotland and the rest of the country is substantial; 48.8% in Scotland against 43.9% in the UK as a whole. However in terms of employment, although the gap between Scotland and the rest of the UK is narrower (23.2% in Scotland as opposed to 20% in the whole of the UK), public sector employment is still of vital importance to the country.
There is no doubt that public sector cutbacks will hit Scotland hard, and many analysts have expressed the fear that the private sector in Scotland will not be strong enough to compensate and drive the growth of employment, particularly in light of the uncertainty over the independence referendum. However, there are signs that the private sector is more than capable of taking the extra strain.
The results of the Bank of Scotland Purchasing Managers Index for February revealed that the private sector was producing jobs at the highest rate for four years, with the blossoming financial services sector leading the way. In addition, there have recently been a number of high profile announcements, including an increase in investment for pharmaceuticals firm GlaxoSmithKline in their Scottish facilities in Montrose and Irvine.