Public sector staff still paid more than private workers

PUBLIC sector workers are still being paid more than their private sector counterparts despite nearly a decade of austerity, analysis shows today.

Even after years of pay restraint since the 2008 financial crisis, public sector staff still earn more than private sector workers with the same education and experience, a report by the Institute for Fiscal Studies (IFS) reveals.

Although the gap is narrowing, and the IFS believes private sector pay will take the lead by 2019, the research group says the public sector has enjoyed salaries between 3 and 6 per cent higher than private sector equivalents over the past 10 years. And they receive guaranteed pensions which are vastly more generous than those on offer for most private sector workers.

Last night Peter Bone, a Conservative MP, said: “People will be surprised ... it brings into question whether public sector workers should be striking. They should be thinking ‘ hang on a minute, we’re on more money than people in the private sector’.”

In 2013, the IFS said that “average real hourly wages” had fallen faster in the private sector than the public.

However, the Office for Budget Responsibility expects that public sector earnings will fall by 5 percentage points relative to private sector earnings over the next three years.

This would take the public-private earnings gap to its smallest for 20 years.

By 2019, private sector wages are expected to finally overtake the public sector, the IFS predicts. But that, too, will create problems.

Luke Sibieta, economist at the IFS and author of the report, said: “Once fewer bright graduates decide to work in the public sector the quality of services could start deteriorating.

“Pay is particularly important to today’s young people as house prices and the cost of living are so much higher than they used to be.”