Are women workers in the public sector paid too much?

Women in public sector earn more than those in private sector, CSO figures show

The CSO data shows that the premium paid to women in the public sector (excluding the pension levy) was about 12 per cent more in 2014

The CSO data shows that the premium paid to women in the public sector (excluding the pension levy) was about 12 per cent more in 2014

 

It is rare that we see a statistic which shows that women are paid more than anyone else, but figures from the Central Statistics Office (CSO) published last week say just that: women in the public sector may be overpaid.

However, there are two key caveats that need to be borne in mind when considering this data. First, the data does not suggest that women are paid more than men, but rather that they are paid more than women working in the private sector. Second, the data may not accurately compare similar types of jobs across both sectors.

Economist Tom Healy of the Nevin Economic Research Institute has crunched some of the numbers available in theCSO’s econometric analysis of the earnings comparisons in the Irish public and private sector. He concluded that women workers in the public sector were better paid than their “like-with-like” comparators in the private sector over the period 2011-2014.

The data shows that the premium paid to women in the public sector (excluding the pension levy) was about 12 per cent more in 2014; men, on the other hand, fared worse in the public sector, earning 0.71 per cent less.

When the pension levy, a deduction on public sector workers’ pay in order to help fund their defined benefit pensions, is included, there was still a premium for women in the public sector, although it dropped to 6.5 per cent; the situation worsens significantly for men, down to -6.4 per cent.

Job protection

As Healy says, one of the reasons women have greater income and job protection in the public sector is that maternity leave and flexibility in hours of work make the public sector an attractive option for parents and especially mothers.

“The penalty in terms of forgone earnings or lost promotional opportunities while taking extended parental leave is not as great as is the case in the rest of the economy,” he says.

However, before we get too excited about all those high-powered, high-earning women public sector workers, Healy reminds us that there is a large concentration of female workers in low-pay jobs in the private sector, such as in the hospitality and tourism sectors. This can make the figures for the public sector look better than they might actually be, as “like for like” is not, in fact, enough alike.

“Even when controlling for age, education, tenure, etc, it is not surprising that there is a positive premium in favour of women in the public sector. High levels of female employment in two of the largest sub-sectors of the public sector (health and education) means that for given levels of education, women workers tend to be better paid than women in other sectors of the economy,” he says.

Moreover, like public sectors in general, the premium for public sector work only goes so far; women in the top 30 per cent of the earnings distribution are, in fact, less well paid than in the private sector.

Healy also raises an interesting question: if women in the public sector are better paid than women in the private sector, then shouldn’t public sector pay be cut to levels in the private sector?

No is his firm assertion, arguing that it would be unwise to use the differential “to drag all workers down”.

“The sharp gender difference shown up in the CSO data exposes the falsity of what passes for neutral evidence-based analysis to justify further cuts to public sector pay and conditions,” he says.