Public sector pay is likely to rise slower than private sector wages over the next four years, damaging potential recruitment of new staff.
Reports from the Institute for Fiscal Studies (IFS) suggest slower paced growth of public sector pay has the potential to create ‘problems’ in recruiting and retaining skilled employees.
This warning adds to fears of ‘substantial’ further cuts in public sector employment prompted by spending plans outlined in the chancellor’s Budget.
However the independent study also highlighted that public sector employees were on average paying into a more generous pension schemes than their private sector counterparts.
The IFS added that lower paid workers who have fewer qualifications and live in poorer areas generally do better in the public sector than in the private. In addition, pay for women is on average around 8% higher in the public sector.
It is thought the difference between public and private sector pay has now returned to 2008 levels. The IFS studies said that public sector pay had been held back in 2010-2012, closing the gap that opened up following the economic crash.
‘There is substantial variation in the estimated differential between public and private sector pay for different types of workers and across different parts of the country. This might suggest differentiating pay awards going forward,’ said Jonathan Cribb, a research economist at IFS.
‘The biggest difference between public and private sectors remains the value of employer contributions to public service pensions. These are on average, much more generous in the public sector than in the private sector,’ he added.
