Scottish Budget 2026 to 2027: integrated public sector pay and workforce policy

Public Sector Workforce

The Need for Workforce Reform

A sustainable and skilled public sector workforce is central to Scotland’s wider programme of public service reform. By 2029-30, we must redesign how services are delivered so they remain high quality, financially sustainable and responsive to changing needs.

Workforce reform, spanning capability, leadership, organisational design and culture, is critical to achieving fiscal sustainability and managing the public sector paybill. The managed reduction of 0.5% per annum to 2029-30 set out in the FSDP will align with service redesign, automation, and smarter resource use. This approach is designed to protect frontline services while reducing corporate costs and improving productivity.

The PSR Strategy committed to reducing annualised corporate costs across the Scottish Government and public bodies by £1 billion (around 20% of identified operating and corporate costs). Workstream 12 of the PSR Strategy committed to delivering workforce reform in partnership with employers and trade unions to ensure we have the right number of people in the right roles with the right incentives and empowerment to deliver change. Our focus is on freeing up frontline workers to do what they do best, supported by more effective back-office systems and shared services.

Partnership Working and engagement

This approach will only succeed through strong, open and constructive partnership working with trade unions and employers. Engagement, fairness and transparency will underpin every aspect of workforce reform, recognising the value of Scotland’s public servants and their essential role in delivering positive outcomes for citizens.

Our efficiency programmes are designed to improve the overall system rather than concentrating solely on individual public bodies. This requires public bodies and Scottish Government to work together to identify and strip out duplication, share services and reduce cost.

Fair Work principles and constructive engagement with trade unions and employers will underpin all workforce changes.

Key Workforce Enablers

This Integrated Pay and Workforce Policy establishes the context for the delivery of PSR Workstream 12. Supporting products - including workforce planning guidance, redeployment toolkit, severance guidance, and best practice examples of digital and automation - will be delivered in phases to align with PSR Workstream 12 and the FSDP to ensure sequencing supports effective implementation. The review of the public sector delivery landscape, in partnership with public bodies, will identify and remove duplication across Scottish Government directorates and public bodies to make the landscape more efficient and effective underpinned by reform activity.

The Scottish Government will publish a Workforce Management Governance Framework in Spring 2026 setting out our approach for all public sector workforces across Scotland including NHS Scotland, firefighters and police officers, local government, further education workers, core Scottish Government and public bodies including non-departmental public bodies, public corporations. This framework will be developed through engagement with employers, workforces and trade unions and will provide the structure, principles, and tools needed to operationalise our approach to workforce management across the public sector. The framework will cover:

• Principles, parameters, and metrics for effective workforce management, including guidance on managing attrition and recruitment controls
• Governance and controls to ensure consistency and accountability
• Good practice workforce planning guidance
• Good practice tools for workforce change, supporting organisational redesign and productivity improvements
• Guidance to promote fair and consistent approaches to:
  • Redeployment
  • Voluntary severance
  • Upholding the No Compulsory Redundancy commitment.
• Examples of best practice in using digital technology and intelligent automation
• An update on progress of the review of the public sector delivery landscape

This framework will underpin a data-driven, collaborative approach to workforce planning and change to ensure resources are deployed efficiently and enable more capacity to be directed to front-line services.

The Workforce Management Governance Framework will be published in Spring 2026.

Any queries on the Integrated Pay and Workforce Policy should be directed to the Scottish Government’s Public Sector Workforce team by emailing:

Public Sector Workforce Policy at workforcepolicy@gov.scot