An economist has warned the Scottish Government that compulsory redundancies may be necessary to meet its target of reducing the public sector workforce by 0.5 per cent annually through to 2031, which is intended to help address a near-£5 billion budget shortfall anticipated by the end of the decade. This challenges the Scottish Government's long-standing policy of avoiding compulsory redundancies, relying instead on natural attrition to reduce headcount. First Minister John Swinney has ruled out compulsory redundancies, though the warning suggests the ambition may be difficult to achieve without them.

David Phillips, head of devolved and local government finance at the Institute for Fiscal Studies, told the Public Service Reform Committee that random attrition may not deliver the necessary scale of cuts whilst meeting increased demand in certain areas such as nursing and software engineering roles. Notably, the public sector actually expanded by 6,640 employees in the year to June 2026, reaching a total of 603,800 workers, undermining government pledges to scale back public sector employment. The workforce growth occurred across the devolved civil service, councils and public corporations, though employment declined in colleges and the police and fire services.