Unions try to mislead taxpayers over the public sector pay premium

The Office for National Statistics (ONS) has today published a report showing the difference in the average hourly pay of public and private sector workers. It shows that the pay gap was around 8 per cent in 2011, with the public sector coming off better. It is staggering that, despite the desperate need to reduce public spending, this is the widest the gap has been in a decade.

As they do each year when these figures are released, Unions have cried foul, claiming that the numbers are being 'misused'. They are desperate, because the ONS findings discredit their repeated attempts to mislead the taxpaying public over the existence of a substantial public sector pay premium. It shows how selfish it to organise strikes and protests, resisting necessary reforms to pay, pensions and working conditions.

There are often challenges in comparing the differences in public and private sector pay because of the different characteristics of these sectors. After adjustments to account for the factors that vary between the sectors (like gender, age, occupation, location of job) public sector workers still come off better. Whilst these sorts of comparisons are difficult to make, the ONS report (which mainly uses data from the ASHE, the Annual Survey of Hours and Earnings) is a good, conservative estimate for the public-private pay gap. In fact the adjustment could even be too favourable to the public sector.

For example, there are a lot more skilled tradesmen in the private sector, which won't necessarily be reflected in the ASHE data on ‘qualifications’.

Finally, ONS statistics do not account for relatively generous public sector pensions, which the Institute for Fiscal Studies (IFS) estimate mean that a public sector worker is on average around 12 per cent better off than a private sector worker on the same basic salary. In November last year we released an online calculator that allows private sector workers to assess how their total remuneration compares to that enjoyed by public sector workers:

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