Public sector ahead of private sector in pay race

Public sector employees have seen their pay packets, including salary and pensions, increase at nearly double the rate of their counterparts in the private sector.

According to research by the Institute for Fiscal Studies (IFS) and funded by the IFS Retirement Savings Consortium, public sector pay grew more rapidly than private sector pay between 2001 and 2005, at 2.3% versus 1.5%.

Factoring in the changing value of employer-provided pensions, the gap becomes even wider with the total value of pay and pensions growing 2.4% a year on average for the public sector compared to 1.3% for the private sector.

Rowena Crawford, a research economist at IFS and one of the authors of the research, said: “Were employer-provided private sector pension to continue to become less generous over time relative to public sector pensions, this might lead to further reductions in the generosity of public sector schemes or, alternatively, to less generous pay awards in the public sector than those offered in the private sector.

“If so, the appropriate choice should depend on which of these options delivers relatively better value for the taxpayer in terms of the impact on recruitment and retention of public sector workers of suitable quality.”

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