PUBLIC SECTOR
Pitfalls of comparing private and public sector wages
Comparisons between earnings in the public and private sectors are “mostly inappropriate, due to the very different workforce profiles of the two sectors”. That’s one the main findings from a new study by Incomes Data Services, entitled Pay in the Public Services 2010.
As IDS explains, the term “counterparts”, frequently used in making these pay comparisons, is “not really appropriate, since the public sector is not only smaller in size, but contains a far higher proportion of professional and specialised staff than the private sector”. By contrast, the private sector contains a wider variety of roles, and has a greater concentration of very low-paid employees on the one hand and very highly-paid people on the other. “These different workforce profiles are one of the major influences on the very different distributions of earnings in each of these two areas of the economy,” says IDS.
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What you will find in this report
This annual study provides authoritative guidance for negotiators and decision-makers on the key issues in public sector pay, pensions and employment:
looks at the major political parties’ policies on public sector pay and how these might shape outcomes this year and next
covers vital topics like progression, equal pay and recruitment and retention
discusses the economic and inflation backdrop and the influence these will have on pay decisions.
Key research findings
The strict limits or freezes being proposed by the main parties will, if implemented, mean that public sector pay rises may well fall behind those in the private sector
In the 1990s, pay limits in the public sector had a severe impact on recruitment and retention, and led, in many areas, to staffing shortfalls, which only began to be addressed in 2000.
Rising inflation will make for real-terms pay cuts for many public sector workers in 2010.
The median pay settlement in the public sector during 2009 was 2.1%, only slightly above the median figure for the private sector, of 2%. There were many fewer pay freezes in the public sector, but this is set to change in 2010/11.
Long-term deals will provide a measure of protection this year for NHS staff, police officers and support staff, and teachers but these deals will all come to an end in 2011.
Tight restraint is having a “deleterious effect on both industrial relations and the machinery for determining pay and conditions, with private-sector comparability all but outlawed”.
Centrally-set pay limits are likely to “stress-test the independence of the pay review bodies”, even as plans are laid for extending this sort of mechanism to other parts of the public sector.
The various equal pay initiatives do not appear to have had an impact on the gender pay gap, which actually widened in the public sector on the latest figures. This is because they are focussed on equal value issues, and leave occupational segregation – one of the main factors behind the gender pay gap – untouched.
Want to know more?
Title: Pay in the Public Services 2010, Incomes Data Services, March 2010.
Availability: For details on how to purchase this report visit the IDS web site at www.incomesdata.co.uk/Catalogue/ProductDetails.aspx?recordid=4087&productid=415461.
Incomes Data Services is the “leading UK information and research service on employment issues, providing a range of publications for employers, trade unions, government departments and other agencies”. For more details visit www.incomesdata.co.uk.