Gap grows between public-private pay deals

6 Jan 11
The gap between pay settlements in the private and public sectors is set to gather pace this year, analysts said today.

By Lucy Phillips

6 January 2011

The gap between pay settlements in the private and public sectors is set to gather pace this year, analysts said today.

Incomes Data Services predicts that salary increases in the private sector will accelerate in 2011, although still trailing inflation, while public sector pay awards will continue to drop.

The forecast is based on IDS data showing the median pay increase for public sector workers was 0.75% in 2010, compared with 2% in the private sector.

With government spending cuts beginning to bite and pay freezes across most areas of the public sector, the analysts expect the median pay award to fall further this year. At the same time, pay settlements in the private sector are likely to rise above 2010 levels, with 3% emerging as ‘a key figure’.

Ken Mulkearn, editor of the IDS pay report, said: ‘Private sector pay settlements could well rise in 2011, under the influence of higher inflation and the tentative economic recovery. But the increase in the cost of living, especially after rail fare rises, and the increase in VAT to 20%, means that most employees’ pay will be chasing inflation. Meanwhile, in the public sector, the government’s pay freeze policy means that staff salaries there will fall even further in real terms.’

The latest IDS figures are based on 22 pay reviews, which took place between September and November last year and covered 1,920,120 employees across the public and private sectors.

Some ten pay freezes were recorded across civil service departments although, in line with government policy, there were small rises for those earning £21,000 or less.

Pay freezes in the private sector were the lowest since the end of 2008.

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