Public sector pay gap continues to widen

Workers in the public sector have enjoyed bigger pay rises than those in private firms despite the Government's attempt to restrain pay, a new report claimed today.

A study by think-tank Policy Exchange said the the gap between public and private sector pay was still rising. with many workers in companies seeing "drastic cuts" in their standard of living.

The report said the public sector "premium" - the additional pay a typical public sector worker received over a private sector worker - was up to 35% calculated on hourly pay.

The study claimed that 2009 was the first year in which average pay for public sector workers was on average higher than for all private sector workers.

The pay gap continued to increase up to December 2010 in spite of pay freezes, the report said.

In Scotland, the North East, the North West and Wales, a typical public worker can expect to be paid a fifth more than the typical private sector worker, said the report, adding 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.

"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."

TUC general secretary Brendan Barber commented: "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.

"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."

Brian Strutton, national officer of the GMB union, said: "This report cuts across the actual paybill data from the local government employers published last week which showed pay for council workers down by nearly 6% in real terms in the two years since 2008\09. This is the second year of a pay freeze and more than 220,000 public sector jobs are going or have already gone."

Unison leader Dave Prentis said: "This a crude attempt to drive a wedge between the nation's workforce and provoke a race to the bottom on pay and conditions. 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.

"This year the banking and finance sector, the utilities, car manufacturing, the retail sector have all had pay increases and city bonuses have made a spectacular comeback. There are many more professionals in the public sector, such as doctors, nurses, social workers, judges, admirals, police chiefs and the lowest paid jobs have been contracted out to the private sector, thus skewing the figures. "