Public sector pay rises still beating private sector

9 May 11
Public sector pay is still rising faster than in the private sector, with hourly wages for state workers now more than a third ahead.

By Helen Mooney

9 May 2011

Public sector pay is still rising faster than in the private sector, with hourly wages for state workers now more than a third ahead.  

Research published today by centre-Right think-tank Policy Exchange shows that the public sector ‘premium’ – the additional pay a typical public sector worker receives over a private sector worker – is now 35% when calculated on hourly pay.  For typical annual pay the premium is up to 16%.

The report, Public and private sector terms, conditionsand the issue of fairness, says that private sector workers have experienced ‘drastic cuts’ in their standard of living while public sector workers’ advantage has grown.

It found that the gap between public and private sector pay continued to rise up to December 2010, despite pay freezes in the public sector, and public sector incomes have grown at double the rate of the private sector since 2002.

In Scotland, the Northeast, the Northwest and Wales, a typical public worker can expect to be paid a fifth more than the typical private sector worker. The only group where pay is higher in the private sector is for the top 10% of earners.

Policy Exchange director Neil O’Brien  said that public sector pay had got ‘hugely out of control’.

He added: ‘This is an issue of fairness. It is unreasonable and unfair to expect private sector workers to make all the sacrifices. We need a much better-balanced system of public pay, with organisations like the NHS and schools given greater freedom to vary pay so they can attract staff but also get value for the taxpayer.’

However, the Trades Union Congress said the report was aimed at creating divisions between public and private sector workers. ‘The truth is that both are having a terrible time,’ said TUC general secretary Brendan Barber.

‘Public sector workers are facing a pay freeze, job losses and have already seen the value of their pensions cut by 25%.’

He added: ‘The government's policies of deep, rapid cuts are doing grave damage to the whole economy, and ordinary workers in every kind of job are suffering the longest decline in living standards for decades.’

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