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Take-home pay index to show sector split

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The growth rate of take-home pay in the public sector is below that in the private sector for the first time in 18 months, according to a new salaries index.

A new index from VocaLink, which calculates take-home pay using the monthly deposit information it provides for banks, shows that annual pay growth in the public sector was 1.3% in the three months up to September, compared to 1.4% in the public sector.

The public sector sample includes salaries in central government, health and the armed forces as well as local authorities.

Taken over the last two years, the public sector annual growth has been 2.4% compared to 1.8% in the VocaLink FTSE 350 Index.

Within that period, between October 2009 and September 2010, the private sector dropped to 0.9% while the take-home pay growth in the public sector fared better at 1.6%, but that position has now switched.

VocaLink chief executive officer Marion King said the government’s drive to reduce spending would maintain the downward pressure on public sector salaries.

“With the two year public sector wage freeze from 2010/11 for those earning above £21,000, private sector wage growth is likely to continue outstripping public sector wage growth from 2011 onwards,” she said.

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