Compulsory redundancies 'may be needed' to cut Scotland's public sector workforce, economist warns

Victoria Quay in Leith, which has office space for around 3,000 civil servants | NATIONAL WORLD

The Scottish Government may need to consider compulsory redundancies to meet its target of reducing the public sector workforce, an economist has warned.

Ministers have set a goal of reducing the headcount by 0.5% annually by 2031 - around 12,000 roles in total - to tackle the near-£5 billion black hole in the public finances expected by the end of the decade.

The government has a long-held principle of not allowing compulsory redundancies within the civil service, with the goal due to be met by not replacing staff in some departments after they have left.

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A civil service produced report last month raised the spectre of a voluntary redundancy scheme, though ministers have steadfastly said they will not sack public sector workers.

But David Phillips, the head of devolved and local government finance at the Institute for Fiscal Studies (IFS), said the Government may struggle to get the workforce it needs without compulsory reductions.

Appearing before the Public Service Reform Committee at Holyrood on Thursday, he said: “We have some concerns about delivering this just through attrition.

“Because attrition, if it happens randomly across the workforce, that might not be delivering you the sort of scale of cuts you need.

“At the same time as cutting the overall workforce, there will be elements of the workforce where we know that either demand pressures or changes in technology and the role that workers that have skills in that area can play in the public sector might need increases.

“You might need increases in the number of nurses, for example, but you also might need increases in the number of software engineers and people that can help drive the use of technology in the public sector.

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“While there may be scope to use natural attrition and redeploy some people, we think that, given the kind of pace of change that’s now needed, the Scottish Government may need to consider schemes that involve redundancies, at least, in the first instance, voluntary redundancies.

“But, if it really wants to deliver this, it may need to consider, unfortunately – I’m not saying this is something we’re pleased to see – compulsory redundancies in certain areas so that it can increase the roles in other areas.”

Figures released this week showed that, despite the commitment to reduce the workforce, the devolved civil service has grown by 1.1 per cent - around 6,000 roles - since June 2025.

The Scottish Government has been contacted for comment.