Public-private sector pay differential narrows since crash

The Central Statistics Office (CSO) has weighed into the debate over public-private sector pay with a research paper that suggests pay differentials have been shrinking since the crash.

The agency found that while public sector workers are paid slightly less than their private-sector counterparts overall, the situation varies significantly depending on the pay grade.

The research supports the findings of other studies that those at the bottom of the income ladder tend to be better off in the public sector while those at the top earn more in the private sector.

Traditional analyses used to be based on the CSO’s national employment survey, which has been discontinued.

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The CSO has, however, developed a new approach using its quarterly national household survey and data from the Revenue Commissioners.

Overall, it found the public/private sector pay differential ranged from 9.2 per cent in 2011 to 5.05 per cent in 2014.

Variations

However, the study revealed great variations in the differential depending on the earnings level reviewed.

Those on low income levels in the public sector typically earned more than their counterparts in the private sector.

The CSO study, which adjusted for the pension levy – introduced during the financial crisis – and for the size of the organisation, showed that in 2014 those at the bottom of the income scale earned up to 11.2 per cent more in the public sector.

If the pension levy and size of the organisation were excluded, the pay differential in 2014 at the bottom rose to 20 per cent.

However, the findings were reversed for those on higher pay grades.

Top earners in the private sector in 2014 outstripped the earning power of their public-sector equivalents by up to 12.5 per cent.

The study also found public/private sector pay differentials were significantly higher for women than they were for men.

It showed the difference in premium between women and men in the public sector ranged from 9.81 per cent to 14.54 per cent.

If the pension levy and size of the organisation were excluded, the pay differential at the top narrowed to 7.4 per cent in 2014.

As an explanatory variable, the size of the organisation had the effect of increasing the estimated public-sector pay differential in most instances, the CSO noted.

Myths

Responding to the study, trade union Unite said the findings dispelled popular myths about public-private sector pay differentials and instead showed that, overall, public-sector workers are paid slightly less than comparable workers in the private sector.

“Public-sector workers are regularly portrayed as overpaid when compared to their private sector counterparts,” Unite regional secretary Jimmy Kelly said.

“The figures published today show that public-sector workers are in fact paid slightly less than their private-sector counterparts,” he said.

“ It also shows that, in contrast to the private sector – where, as shown by yesterday’s ICTU report, top executives can enjoy Lotto-style pay packages – there is greater income equality in the public sector,”Mr Kelly said.