Public sector hourly wages outstripped those of the private sector for the second year running in 2010 as the bottom 30% of private sector employees suffered “dramatic” pay cuts, a report has revealed.
The study undertaken by right-wing think tank the Policy Exchange and based on Office of National Statistics data revealed that, in every region of the UK except Yorkshire, the pay gap between public and private sector employees widened between 2008 and 2010, with the largest gulf found in Wales and the North West.
The report claimed that, among salaried personnel, the gap or ‘pay premium’ between what a typical public sector worker and their private sector counterpart earned had risen by 4% to 16.5% over the last two years.
When calculated on an hourly basis, however, the average state worker now received up to 35% more than their private sector equivalent, a figure that rose to 43% if pensions were taken into consideration. For example, the report said, a middle-earning employee in a private company would receive an average hourly rate of £10.06, while an equivalent role in the public sector would get £13.54.
In fact, only the top 10% of private sector earners on more than £47,000 per annum now took home more than public sector staff, the study attested, adding that on current rates, public sector pay would need to be frozen until 2018 to allow private sector colleagues to catch up. This was not least because the bottom 30% of private sector employees had suffered “dramatic” pay cuts over recent years.
Neil O’Brien, the Policy Exchange’s director called for the end to collective pay bargaining by the public sector to try and even out the situation: “Public sector pay has got hugely out of control. 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,” he said.
But unions dismissed the study as simply a right-wing attempt to “stir up divisions” between public and private sector staff. Dave Prentis, leader of Unison, said: “The data used is out-of-date and does not reflect the true picture and it does not compare like-with-like. It should be taken with a huge barrel of salt.”
