Public and private pay gap hits 10-year high

The Office of National Statistics (ONS) said that last year public sector workers were paid on average between 7.7pc and 8.7pc more than private sector employees. The figure for April 2011 compares with a gap of 7.8pc in 2010 and 5.3pc in 2007, before the financial crisis began. The ONS said that to make sure the figures are consistent over time, the numbers assume employees of those banks nationalised in 2008 were in the private sector until 2011. If the ONS had not made that assumption, the pay gap would have widened even more to 9.3pc. Several reasons were given for the rise, including the fact that there are more older employees in the public sector and earnings tend to rise with age. Another reason given was that that the public sector is made up of a greater proportion of higher-skilled jobs, with more lower-skilled jobs outsourced to private firms in the past decade. The ONS also said public sectors were paid more because there is a bigger proportion of people who have degrees or equivalent qualifications in the industry and private sector workers are more likely to get other perks such as company cars and health insurance. The ONS figures will provide fresh ammunition for Conservatives who believe the public sector should be cut back further as the data show salaries were inflated during Labour's years in command. However, unions – and even the ONS – argue that comparing the pay of the public sector with the private sector is not a "straightforward" task and you can get very different results using different methadologies. Unison warned the report "masked the reality" of low pay and the ongoing pay freeze. Neil Carberry, CBI director for employment, said: "These average pay figures do not make direct comparisons between specific job salaries in each sector. Nevertheless, it is clear that public sector pay is still considerably higher than pay in the private sector. "We need to ensure that public sector salaries reflect local labour market conditions, by putting pay decisions into the hands of individual employers at the local level." The ONS's figures do not take into account that the private sector excludes self-employed people and non-cash remuneration such as pension contributions and health insurance.