Workers in the public sector are more than 40pc better off

Public sector workers receive more than 40 per cent extra in pay and pensions than their counterparts in private companies as state wages spiral, a report has found.


By Tim Ross, Social Affairs Editor 10:00PM BST 08 May 2011 Follow Tim Ross on Twitter
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The six million state employees have increased their advantage over workers in the private sector since the start of the recession.




In every region of Britain, except Yorkshire, the gap in pay between public and private employees widened between 2008 and 2010, with the largest gulf in Wales and the North West, according to the study from Policy Exchange, a think–tank.




When calculated on an hourly basis, the typical state employee earns up to 35 per cent more than his counterpart in the private sector, the report finds. But when the more generous pensions for state employees are taken into account, the advantage rises to 43 per cent.




Only at the very top of the scale, where the highest earners include bankers, footballers and television stars, do private sector salaries outstrip those in the state professions.




The researchers said that, on current rates, public sector pay would need to be frozen until 2018 before workers in private companies would catch up. The study called for an end to national pay bargaining from unions and urged the Government to allow more flexibility to reward key workers, such as accident and emergency staff, in parts of the country facing shortages.



George Osborne, the Chancellor, is attempting to restrain public sector pay with a two–year freeze and moves to reform pensions.
Based on figures from the Office for National Statistics, the Policy Exchange study found that public sector workers received significantly higher pay than those in private firms for doing exactly the same work.
For example, the report says that primary school teachers in state education typically earned £33,140 after banking a pay rise of 2.1 per cent, compared with a 12 per cent pay cut for the same job in a private school, where the average salary was £21,159 in 2010.



A middle–earning worker in a private company earns an hourly rate of £10.06, but someone doing the same job in the public sector earns £13.54, according to the figures.



Even on a conservative estimate, the gap between private and public sector pay has doubled since the start of the recession two years ago, the report found.



The lowest estimates, which take account of the higher qualifications and older workers in the public sector, put the gap at 8.8 per cent.



However, during the same two-year period, many in private sector jobs suffered pay cuts, particularly those on lower incomes.



Neil O'Brien, the director of Policy Exchange, said it was unfair that private sector workers should "make all the sacrifices". "Public sector pay has got hugely out of control," he said. "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."



The report found that in Scotland, the North East, the North West and Wales, a typical public sector worker can expect to be paid one fifth more than the typical private sector employee.



For only the second year since 1997 – the other being in 2009 – average pay was higher in the public sector than in the private sector.



Only the highest paid workers in the private sector on more than £47,000 a year were paid more than their public sector counterparts. The bottom 30 per cent of private employees suffered "dramatic" pay cuts.



Unions dismissed the study as an attempt by a Right–wing think–tank to "stir up divisions" between public and private sector workers.



Dave Prentis, leader of the Unison union, 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."



Brendan Barber, the general secretary of the TUC, said: "Public sector workers are facing a pay freeze, job losses and have already seen the value of their pensions cut by 25 per cent."