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Public deals outstripping private, Policy Exchange

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Workers in the public sector have enjoyed bigger pay rises than those in private firms despite the government’s attempt to restrain pay, a thinktank has claimed.

A study by Policy Exchange said the the gap between public and private sector pay was still rising. with many workers in companies seeing “drastic cuts” in their standard of living.

The report said the public sector “premium” - the additional pay a typical public sector worker received over a private sector worker - was now up to 35% calculated on hourly pay.

The study claimed that 2009 was the first year in which average pay for public sector workers was on average higher than for all private sector workers.

The pay gap continued to increase up to December 2010 in spite of pay freezes, the report said.

In Scotland, the north-east, the north-west and Wales, a typical public worker can expect to be paid a fifth more than the typical private sector worker, said the report, adding that the only group where private sector pay was higher than the public sector was for the top 10% of earners.

Policy Exchange director Neil O’Brien said: “Public sector pay has got hugely out of control. There is pressure on budgets like never before because of the deficit. If the unions want to preserve their members’ jobs they have to realise that pay is an issue which will have to be looked at.

“This is an issue of fairness. It is unreasonable and unfair to expect private sector workers to make all the sacrifices. We need a much better-balanced system of public pay, with organisations like the NHS and schools given greater freedom to vary pay so they can attract staff but also get value for the taxpayer.”

Brian Strutton, national officer of the GMB union, said: “This report cuts across the actual paybill data from the local government employers published last week which showed pay for council workers down by nearly 6% in real terms in the two years since 2008-09. This is the second year of a pay freeze and more than 220,000 public sector jobs are going or have already gone.”

Unison leader Dave Prentis said: “This a crude attempt to drive a wedge between the nation’s workforce and provoke a race to the bottom on pay and conditions. The data used is out of date and does not reflect the true picture and it does not compare like with like. It should be taken with a huge barrel of salt.”

Click here to read Policy Exchange’s report - Public and private sector terms, conditions and the issue of fairness

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