Public sector pay – the myths exposed

[ttosca]

Claims that public sector workers are 40% better off than their private sector counterparts melt under the spotlight.

www.guardian.co.uk/commentisfree/2011/may/09/public-sector-pay-workers

According to a Policy Exchange report highlighted by the Telegraph, public sector workers are 40% better off than their private sector counterparts, if wages are taken on an hourly basis and pensions are included. This is a longstanding claim on the right, used to justify attacks on public sector pay and pensions. The problem is that neither the numbers, nor the narrative, are on the level.

1. The report doesn't compare like with like. Public sector workers are more skilled on average than private sector workers. This has always been the case, but the tendency has been increased in recent years as low-skill jobs have been contracted out, and the public sector incorporates more graduates.

1. Taking into account skill, even the author of a previous Policy Exchange report admits that the pay gap shrinks to a mere 2% for men and 4% for women.

1. Some of the difference arises due to superior bargaining power for unionised public sector workers. A study led by former Bank of England governor David Blanchflower in 2010 found that this has been increasing in recent years, in part due to the counter-cyclical effects of union-bargaining. The decline in union density in the private sector, not public sector avarice, has reduced the relative incomes of private sector workers.

1. Not all surveys find any pay "premium" for public sector workers. A 2008 survey for Nottingham University finds no significant pay premium for public sector women. In fact, the relative pay of public sector workers has declined since the 1980s due to a contraction in public sector investment.

1. Much of the current difference arises because of the slump in private sector pay due to the recession. As the Sunday Times Rich List has recently shown, the rich have rebounded from the recession with an increase of 18% in their wealth in the last year, but the majority of workers are expected to suffer a real terms loss of income for the fourth consecutive year. There is no reason to expect public sector workers to suffer for this. The natural solution would be to improve private sector pay.

1. Public sector pay and employment has a counter-cyclical effect on the economy. At a time of sluggishness in the economy, it makes no sense to target those sectors of the economy that are sustaining demand.

1. There are other advantages to higher median public sector pay, in that it helps close the gender gap, which is approximately 29% in the private sector, compared with 21% in the public sector. The overall tendency is for the public sector to reduce inequalities between different groups of workers.

1. Public sector workers are already facing a pay freeze, beginning this year and lasting until 2013. This is being accompanied by the loss of up to half a million jobs and cuts to pensions which John Hutton, who led a review of public sector pensions, admitted were "fairly modest by any standard".

The Policy Exchange report compounds years of myth-making by the rightwing press and thinktanks, blaming public sector "greed" for a crisis created by the banks. There is little evidence of a substantial pay premium for public sector workers, and no reason at all why it should be considered a social ill.

I love how these think tanks have names reminiscent of communist quangos yet are mostly very right wing. Policy Exchange even sounds old fashioned and staid ( so not too worrying/radical/scary ).

The public sector includes specialist doctors, surgeons etc. I bloody well hope they get paid well. The public sector run this country. Pay them more.

Lower status jobs like cleaning etc are now in the private sector, even where they are cleaning public sector spaces. And these people are paid peanuts for the sake of profit.

No wonder right wingers hate unions - scared of workers actually being paid a decent wage instead of lining the pockets of shareholders and the execs. It's sad.

Thanks ttosca for putting the other side of this 'debate' forward. I am a modestly paid public sector worker and get very grrrr with the prevailing attitude to us being lazy, jobsworths and having 'gold plated' pensions.

Good post, thanks.

Great article, thanks.

I've only just seen this OP - but great post thanks very much. It's nice to see some honesty and realism added to the public sector 'debate'.

Ed Holmes (policy exchange) defends the report [[

www.guardian.co.uk/commentisfree/2011/may/09/public-sector-pay-workers here]]

also interesting bit about this on 'more or less' on radio 4.

"3. Some of the difference arises due to superior bargaining power for unionised public sector workers."

Run that past me again. We are trying to pretend that we are not better paid but if we are it's only because of the unions. Does that make sense?

"5. Much of the current difference arises because of the slump in private sector pay due to the recession ... The natural solution would be to improve private sector pay"

Hahahahahahaha. They have no idea how the real world works. Shall we tell China to improve their pay and stop undercutting us?

If it is so awful in the public sector, how come people stay there so long? I remember in the firefighters' dispute them saying on the one hand that they were dreadfully underpaid but on the other hand they had been in the job, on average, about 25 years. Can't have been that bad after all.

purits

No, they're saying they're not lazy and overpaid.

And yes, employees in the private sector should do more to increase their bargaining power by joining unions. The private sector is less unionised that the public sector. Meanwhile, the legislation covering employee protection in the UK is amongst the worst in europe.

British workers work the longest hours, have the fewest vacations, and have the fewest protections against abuse / exploitative work practices.

There is no way the UK can or even should compete with China, India, and developing countries on work legislation. That would take the UK back 150 years. The best thing the government can do is make sure that its citizens have access to a good education so that they can work in the new knowledge economy. Unfortunately, this government is doing precisely the opposite.

They're not saying it's so awful to work in the public sector.

'Some of the difference arises due to superior bargaining power for unionised public sector workers."'

What about those public sector workers who are not allowed to have a union?

The 'more or less' radio 4 podcast that reikizen mentions above is worth a listen here.

The policy exchange report is discussed first, from about 1min to 6mins.

Yes the 'More or Less' podcast is interesting. It's also worth reading Full Fact's analysis on this.

Thanks for putting the other side.
I've felt that descriptions of public secor workers as lazy and overpaid are part of a handy smear campaign against public sector workers which influences public opinion against them and makes it very easy for the Govt to go about destroying public services with little complaint from wider society.
The public sector workers I know generally work longer than their hours, recieve less than the avarage wage and carry a lot of stress and responsibility.

absolutely Selks
I am a public sector worker and am totally ticked off with the demonisation of us that this government is continually perpetuating.
I am also the parent of an autistic child and am very fearful for this future in this current environment.
The private sector is not the saviour of this country. The services that the public sector provide are necessary for the private sector to exist. Who after all produces the educated workforce or keeps them in good health. The education system and NHS.
I am utterly bemused by the assumption that the exploitative private sector is the way forward.

^ especially after the exposure of the mal-practice in the care home on the BBC the other night.
Some private sector bosses should hang their heads in shame.

The pampered attitudes of the preening public sector prima donnas is laid bare right here on Mumsnet.

They are overpaid, with far too generous pensions and perks, and swan around not doing any work on outrageous sick pay settlements. They use their Spanish practices to rip off the taxpayer, deliver extremely poor quality results, and try to impose their far-left ideology on the great British public.

The day of reckoning is finally here, thanks to Eric Pickles, Michael Gove, but above all, George Osborne.

The bleating will continue, but no-one in the real world will have any sympathy whatsoever for quangocrats, diversity co-ordinators, and five-a-day consultants.

I can't wait till the co-ordinated strikes about protecting their ludicrously generous pensions start - that is the day when Cameron will have the opportunity to stop being so wet, and to unleash the forces of raw Thatcherism upon the Guardian reading classes.

Should of course mention - the pension changes being implemented are those suggested by ex-Labour minister John Hutton.

Even the sensible left know that the gold-plated taxpayer rip-off cannot continue. Thankfully, the unions and Red Ed are stupid enough to argue against these modest and sensible changes.

I have worked in both public and private sector doing similar jobs and I was paid more in the private sector. I think that this is true of many low-medium skilled jobs.

Longfingernails...wow, weirdly bitter and unbalanced ramblings!

On the contrary - I am delighted that my favoured policies are being implemented - although in a weak as dishwater sort of way.

The public sector will at least start to get their just desserts. I favour far more radical reform - cutting the public sector (excluding the military) by at least 75% or so - but at least it what is being done so far is a good start.

Ok, if you cut the public sector workers (teachers) in my workplace, you will have mixed-age primary school classes of 37.

Ok, we deserve it, because we will be getting our just deserts (due to our lefty/communist lessons that indoctrinate pupils; expecting and encouraging children to fail; languishing in luxury due to massive salary, etc, etc).

Bit of a bugger for the children though.

In education, cutting out the local education authority non-jobs via Gove's fantastic policies on academies and free schools will enable more money to get towards the front-line.

Of course, crap teachers should be quaking in their boots. Their precious union-thug protected right to mediocrity is being abolished by the wave of independence being unleased across the education sector.

Usual Tory rubbish about not needing the public sector Longfingernails. It's just crass and vicious propaganda.