Public sector: economic overview

The Size of the Public Sector in Scotland

There is no one way to measure the size of the public sector. It can be looked at in terms of:

• GVA: the share of the economic activity coming from the public sector. This is closely linked to the share of the labour force working in the public sector. Most of the output is provided free at the point of delivery so not charged in the same way as other market goods. Output per hour can be used to provide a measure of public service productivity.
• Spending: total public sector spending as a share of the economy. This will be a larger number than the employment or GVA shares, as it includes spending which funds activity in other parts of the economy through transfers. For example, although the state pension is public sector spending, it will ultimately be spent by pensioners on consuming goods and services in the private sector; and
• Employment: the share of the labour force which is working within the public sector;

The size and composition of the public sector will reflect choices on the delivery of public goods and services. For example, water services are provided in the public sector in Scotland, but in the private sector in England and Wales. Comparing the public sector in Scotland the UK, it is notable that Scotland accounts for 11% of UK public sector employment in local government. This may indicate that there is a greater tendency for local government services, such as social care, to be delivered by the public sector in Scotland compared to the UK. However, due to the range of ways that local authorities provide public services it is difficult to draw clear conclusions.