Tax and Fiscal Policy

Public sector pay should not be determined centrally


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IEA reacts to Nicola Sturgeon's announcement that she will end the public sector pay cap

Commenting on the First Minister of Scotland’s announcement that she will end the public sector pay cap in Scotland, Jamie Whyte, Research Director at the Institute of Economic Affairs, said:

“The decision to lift the public sector pay cap in Scotland is misguided and private sector workers – whose pay has actually been worse on average since the financial crash – will inevitably have to foot the bill for an increase in public sector pay. Fundamentally public sector pay should not be determined centrally, but devolved down to local regions to allow, for example, hospitals to react to shortages and possible demand changes. The current politicisation of public sector pay bargaining causes huge inefficiencies.

“The fairest way for Scotland to make ends meet if they are to end the cap would be for the government to make significant spending cuts elsewhere in the budget. Unfortunately, it doesn’t look like this is on the First Minister’s agenda. But politicians elsewhere in the UK would do well to heed this advice.” 

Notes to editors: 

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The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems and seeks to provide analysis in order to improve the public understanding of economics.

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