Headlines: March 28th, 2012

The Office for National Statistics estimates that pay in the pubic sector is between 7.7 and 8.7 per cent higher than in the private sector. But the estimate is heavily qualified.

Making comparisons between the two sectors is very difficult because of differences in the types of job and characteristics of employees. The public sector is made up of a higher proportion of higher skilled jobs. The proportion of higher skilled jobs has increased over the last decade as lower skilled jobs have been outsourced from the public to the private sector. The public sector also consists of a higher proportion of older employees and earnings tend to increase with age and experience.

There are other factors that could influence the pay difference and this analysis does not include other forms of remuneration, for example pension contributions, company cars and health insurance. One of the surveys used to provide the data does not cover those who are self-employed so it will miss many high paid self-employed and also some lower paid.

In addition, the timing of the survey in April means that only bonus payments related to April are included, outside of the main bonus season which is normally January to March. These factors would account for at least some of the difference.

Commenting on the figures TUC General Secretary Brendan Barber said: “The figures show that graduates tend to earn more in the private sector, whereas people with lower skill levels will have slightly higher salaries if they work in the public sector. Should the government’s ill-thought out proposals on local pay begin to take shape, the real losers would be the thousands of home helps, bin men and dinner ladies – workers who are already low paid – and the communities in which they live.

He added: “By setting pay nationally across the public sector, hundreds of thousands of lower-paid workers – many of them women – have been able to enjoy decent rates of pay. The introduction of local pay would change this, condemning them to a future of permanent poverty, and where pay inequality becomes the norm as the gender gap widens to mirror the huge salary divide between men and women in the private sector.”