How should Scotland set the pay of its public servants? What institutions should it establish to do this and at what level should pay be set: nationally, regionally or locally? These issues are interlinked and are discussed in this chapter. The issue of reform transcends the debate about independence for many argue that the reform of pay setting is required even if the existing arrangements remain. In this chapter we shall look at the current arrangements for setting the pay of public servants in Scotland and contrast these with those in other small open economies in Northern Europe.