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Public sector pay gap ‘widens’


12 May 2011

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Public sector staff have enjoyed larger pay rises than their private firm counterparts despite government attempts to restrict pay, a report has revealed.

Think tank Policy Exchange explained that the gap between public and private sector pay is still rising, while other workers have seen “drastic cuts” in their standard of living.

The report outlined how the public sector ‘premium’, which is the additional pay a typical public sector worker received ahead over a private sector workers, had reached up to 35% based on hourly pay.

Researchers claimed in the study that 2009 was the first year that average public sector pay was higher that for all private sector workers.

Despite pay freezes this pay gap continued to increase up to December 2010, according to the report.

A typical public worker in the North West, the North East and Wales can expect to be paid around 20% more than the typical private sector worker, according to the report.

The report added that the only group where private sector pay was higher than the public sector was for the top 10% of earners.

Policy Exchange Director Neil O’Brien said: “Public sector pay has got hugely out of control. There is pressure on budgets like never before because of the deficit. If the unions want to preserve their members’ jobs they have to realise that pay is an issue which will have to be looked at.”

TUC General Secretary Brendan Barber said: “This is just another attempt by a right-wing thinktank to stir up divisions between workers in the private and public sectors.

“The truth is that both are having a terrible time. Public sector workers are facing a pay freeze, job losses and have already seen the value of their pensions cut by 25%.

“In the private sector pay freezes are still common, and public spending cuts are doing just as much damage as they are in the public sector.”

Copyright © Press Association 2011

Policy Exchange

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