The latest analysis of pay settlements from IDSPay.co.uk shows that a clear gap has emerged between the levels of pay awards in the public and private sectors. The median pay award for the private sector in the three months to April is 3%, while in the public sector it is zero.
The latest analysis period includes public sector data for the first time this year. April is a key month for public sector pay reviews and the latest figures begin to show the effects of the Government policy on public sector pay. The median pay increase for the public sector is zero, with all but one of the pay reviews in this sector being a freeze on basic pay.
While all public sector pay freezes are measured as zero pay settlements, some (but not all) have followed Government advice and awarded increases for those paid below £21,000 a year. The major exception to this has been in local government where the pay of the lower paid has also been frozen.
Meanwhile the private sector median has risen from 2.5% since the last analysis of the three months to March, driven by a number of higher end deals, particularly in the car industry and the energy companies. The median increase in manufacturing has risen to 3%.
This is the first time in living memory that a Government has introduced such a strict incomes policy on public sector pay. This was not done during the incomes policies of the 1970s, nor after the 1980s and 1990s recessions. The nearest to such a policy was the 1.5% limit on public sector increases in 1993, but this was for one year and at a time of much lower inflation than today. RPI inflation was 1.3% in April 1993 when the 1.5% limit came in to force in the public sector.
Concerns about the decline in purchasing power of real incomes will continue to grow, and it is no good economists saying that inflation is driven by ‘external’ factors such as oil, energy and food prices and that the effects are temporary. The RPI inflation rate for April 2011 was 5.2%. The RPI inflation rate a year ago, in April 2010, was 5.3%.
So over the past two years we have seen prices rise by 10.5% at a time when pay rises have almost disappeared from the public sector. And while the Government’s two-year pay freeze for the public sector ‘officially’ began in April 2011, there have been no pay rises in local government in either 2010 or 2011.
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4 August 2011 at 19:34
Ian Wright
Well considering Public sector workers are paid 10% more than private sector workers, this means they are still paid 7% more… public sector workers need to wake up that the tax payer cant afford to pay hugely bloated wages.. if you dont like it, get a job in the private sector with no unions, no pensions and if you are on the sick you get fired!!! So no sympathy at all.
http://www.telegraph.co.uk/finance/economics/7036131/Record-gap-between-public-and-private-sector-pay.html
15 August 2011 at 10:05
John Williams
Pretty enlightened stuff there Ian. I take it you’re campaigning for improved pay and working conditions in the private sector. After all, unbridled private capitalist enterprise promises abundance and prosperity for all – doesn’t it?
22 August 2011 at 22:06
Dan
@Ian You need to source your ‘statistics’ properly: quoting figures from right-wing newspapers is quite possibly the worst way to fine genuine, balanced economic Data. Those figures, curiously, do not mention which deciles of the income distribution are compared. They do not take into account the numbers of people in the public sector, the types of jobs they do, and cleverly do not include extras such as company car, insurance/pensions, shares in company, etc. The upper echelons of the private sector are paid better and are far more numerous than the public sector. Really, your argument is misplaced if you criticise the public sector for any pay discrepancy you might find. I suggest that, if you have a problem with your level of pay, you should join a trade union, or unionise your workplace. If the disparity is as bad as you think it is, you’ll have little trouble in fighting for your comrades in this way.
4 October 2011 at 15:10
Jon
Seriously Ian, you should be ashamed of such a poorly argued post. Typical right wing, knock the public sector rubbish. Start from the facts and construct a well-argued, coherent point and I might consider what you have to say.
Here’s a starting point for you. It’s a bit out-of-date now though, but it’s still significantly better than using ‘The Telegraph’ (or ‘The Guardian’ if you were that way inclined) to support your argument (are you serious with that or are you being ironic?!).
http://www.ifs.org.uk/budgets/gb2011/11chap7.pdf
“One often-quoted statistic is the difference between the mean wage in the public and private sectors. As was highlighted in last year’s Green Budget, drawing conclusions on the public sector pay premium from such raw comparisons is not appropriate. The raw differential does not take into account the fact that the skill compositions of the two sectors are markedly different: it is like using the average pay of neurosurgeons and the average pay of bartenders to conclude that neurosurgeons are overpaid!”
21 October 2011 at 16:21
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