The pay premium enjoyed by public sector employees has widened sharply since the early part of the decade, according to a report that will deepen the dispute between the Government and the unions.
Research from the Office for National Statistics indicated that state employees were paid on average 7.8 per cent more an hour than those in the private sector last year, excluding overtime. That compares with a 3 per cent gap in 2002.
The figure allows for the differences in average age, skill levels, regional distribution and gender balance between the public and private sector.
The raw gap in hourly pay is even wider, with civil servants and other state employees earning 13.1 per cent more than those in the private sector as of April last year, excluding overtime, up from 1.7 per cent in 2002.
The research also revealed that high-flyers with a degree or an equivalent qualification tended to be paid better in the private sector than in government. The figures do not account for pensions and exclude the self-employed, which therefore excludes many highly paid workers in the private sector.
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The report comes at a sensitive time, given trade union unrest over the Conservative-led coalition’s attempts to reform public sector pensions. Unions representing teachers, immigration officers and Jobcentre workers staged a strike on June 30 over the Government’s plans to make them pay more towards their retirement and work until they are older.
Graeme Leach, director of policy at the Institute of Directors said: “Private sector employees earn less and then have to pay through taxation for the generous final-salary schemes of people earning more. The old argument that the public sector workforce should have more generous pensions in retirement, because they earned less whilst working, clearly no longer applies.”
The ONS said that it was difficult to measure accurately the pay differential because of differences in the characteristics of workers in the two sides of the economy. For instance, the public sector tends to have a larger proportion of highly skilled workers, in part because of the trend towards outsourcing of lower-skilled jobs to private contractors over recent years. Its workers also tend to be older, and therefore better paid because of seniority.
The ONS article attempted to strip out such factors to find the underlying pay differential. This stood at 5.3 per cent on the eve of the credit crunch in 2007 before widening to 5.9 per cent in 2008 and then further to 7.8 per cent in 2010.
Government workers earned more than those in the private sector across the age range, with hourly earnings narrowing only at about the age of 40. Public sector employees work fewer hours than those in the private sector, the article said.
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Brendan Barber, the TUC general secretary, said: “Hourly pay has been higher in the public sector for over 30 years. This is because public sector workers tend to be more highly skilled, doing jobs like teaching and healthcare.”
A Treasury spokesman said: “The Government announced a two-year public sector pay freeze in the 2010 Budget, excluding those earning £21,000 or less, saving £3.3 billion a year by 2014-15.”
The ONS figures assumed that the banks in which the Government holds a stake — Royal Bank of Scotland and Lloyds Banking Group — remained outside the public sector. If their employees are counted as part of the Government, the public sector pay gap widens to slightly less than 9 per cent.