Austerity bites as private sector pay rises above the public sector for the first time since 2010

 

George Osborne’s austerity policies have helped to push average private sector pay above public sector pay, official research has showed.

Average pay for public sector employees in April 2013 was 1.9 per cent lower than the average among private sector employees, according to the Office for National Statistics.

This represents a reversal of the pattern in 2010 when the Coalition took office. At that time, average remuneration levels in the public sector were roughly level pegging with those in the private sector, after making various statistical adjustments.

The figures will feed into the political debate over living standards, which is likely to dominate the run-up to next year’s general election. Labour has accused the Coalition of presiding over a “cost of living crisis”, with average pay rises across the country languishing below the rate of inflation since the global financial crisis.

The ONS said the relative deterioration for state workers was a result of the Coalition’s decision to freeze public sector pay in real terms in 2010 to meet the Chancellor’s objective of eradicating the budget deficit over the Parliament.

The shift is a partial reversal of the trend in the years following the global financial crisis of 2008 when average public sector pay grew more rapidly than pay in the private sector.

The latest figures show that the richest five percent of private sector workers take home 11 per cent more than public sector workers. In London the private/public pay gap for top earners is around 28 per cent.

Read more: New figures go against right-wing claims that public sector workers are grossly overpaid

However, at the bottom end of the pay spectrum public sector workers still do considerably better than their private sector counterparts. Across the UK, the lowest five per cent of earners take home 8.4 per cent more in pay than private sector workers. In London the public sector premium for the poorest rises to 15 per cent.

“Top earners in the private sector enjoy a huge wage premium over the public sector but the lowest paid do even worse than their public sector counterparts” said Frances O’Grady, general secretary of the Trades Union Congress. “If private businesses paid their lowest paid staff more fairly we’d make huge inroads into reducing in-work poverty.”

The ONS data indicated a large divergence in public/private pay around the country. In Northern Ireland average pay in the public sector was 7.1 per cent higher than in the private sector. In the North East the gap was 6.3 per cent in favour of the public sector. However, in London private sector workers earned 11.2 per cent more, while in the South East they earned 6.9 per cent more. In Scotland average private sector workers received 2.5 per cent more, while in Wales they got 2.3 per cent less.

The raw figures from the ONS’s comprehensive annual survey of hours and earnings showed that mean average gross earnings excluding overtime of private sector workers was £16.26 per hour in 2013 versus £14.16 in the private sector. That equated to a pay gap in favour of public sector workers of 14.5 per cent. But the ONS said it was appropriate to make various statistical adjustments to these figures to reflect the fact that, among other things, public sector workers tend to have higher qualifications than private sector workers and that people in the public sector work for larger organisations which pay higher wages. After making these adjustments it said the pay gap swung to around 1.9 per cent per hour in favour of the private sector.

The most recent survey of wages by the ONS showed that average rose by 1.1 per cent in the final quarter of 2013, still below the inflation rate of two per cent. In those three months private sector pay rose by 1.5 per cent year on year. Public sector pay rose by just 0.2 per cent.

In last year’s March budget George Osborne extended the public sector real wage squeeze a further year, until 2015/16.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
2015 General Election
May2015

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: Practice Accountant - Bournemouth - £38,000

£32000 - £38000 per annum: Ashdown Group: A successful accountancy practice in...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + Uncapped commission: SThree: Does earning a 6 figu...

Recruitment Genius: SEO Executive

£18000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: New Lift Sales Executive - Lift and Elevators

£35000 - £40000 per annum: Recruitment Genius: A challenging opportunity for a...

Day In a Page

The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower
Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

Did a botched blackmail attempt help Cyril Smith escape justice?

A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss