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Data shows problem worst in Scotland By Business Editor Colin Donald
A survey by international policy and performance group 4-consulting reveals that median gross hourly pay for public-sector workers in Scotland was £13.72 in 2011-12, compared to £9.65 in the private sector – a difference of 42%.
The study also finds the gap widening as public-sector pay continues to rise at a faster rate than its private-sector equivalent.
The 42% percentage difference is seven percentage points greater than the UK average of 35% (£11.20 private to £13.64 public), and greater than other parts of the country with traditionally high levels of public-sector employment such as Wales ( 39%), the North East (34%) and the North West (40%).
The lowest differential is in London, where public-sector workers earn only 20% more on an hourly basis than their counterparts.
Richard Marsh an economist for 4-consulting and a member of a Scottish Government group advising on economic modelling and statistics, said: "The Office for National Statistics (ONS) took into account the type of jobs, working patterns, qualifications and gender differences, and treated the banks consistently as private-sector businesses.
"When they crunched their numbers they found that a like-for-like comparison showed public-sector workers across the UK earned on average over 8% more than their counterparts in the private sector.
"While certainly much smaller than the 42% Scottish figure, this gap has grown every year since the start of the downturn in 2007 and is now at its highest point in the decade since the gap was first measured consistently in 2002, when it was 3% in favour of public-sector workers."
Beyond the Scottish sectoral comparison, the latest data also show that public-sector workers in Scotland are the highest paid outside of London and the South East, although Marsh said that "the addition of personnel from the state-rescued Scottish banks must be taken into account here".
David Bell, professor of economics at Stirling University, said: "In a way these findings are not surprising because there are more high-end public-sector jobs in Scotland than, say, the North East, but as we are looking to four to six years of stringency in public-sector settlement, and pay accounts for more than half that settlement, this analysis underlines that Scotland needs to think very clearly about designing a pay structure that does not pay more than is necessary to attract, retain and motivate public-sector workers.
"Both the Beveridge [independent budget] review and the Campbell Christie commission [on the future delivery of public services] hinted that this question needed to be addressed. The Scottish Government's powers are in a sense limited, as they control the pay of only a few directly.
"But they set the overall budget that the NHS and local government are paid from, so effectively have an influence across all of the public sector, even though they are actually at the negotiating table in relatively few cases."
The 4-consulting review also found that median public-sector pay for full-time workers rose by 1.7% last year, compared to a rise of just 0.4% for public-sector workers across the UK and a 0.4% rise among private-sector workers in Scotland.
Marsh said: "Although all Scottish workers clearly continue to endure tough times, it's not unreasonable to suggest that pay restraint has been felt more sharply among workers in the private sector than the public sector."
Comparing public and private-sector pay is difficult, given the different skills mix in each sector, differences in age and pay distribution, qualifications of workers, gender balance and hours worked.
However, by reducing the figures to hourly rates, Marsh claimed that the ONS analysis "washes away" such anomalies to arrive at a fair comparison of hourly rates.
Professor Brian Ashcroft of Strathclyde University gave a sceptical response to the report. "A like-for-like comparison is not being made, and skill levels vary both between the public sector and private sector, and across the public sector in UK regions," he said.
"The occupational composition will vary: there are many more less qualified and unskilled people working in the private sector, I believe."
The analysis was also disputed by Dave Watson of the mainly public-sector trade union, Unison.
He said: "In the real world, employers and unions compare similar jobs for pay purposes and these crude statistics don't do that. Cash earnings don't always tell the full picture, either."
The ONS is expected to publish the 2012 edition of its Annual Survey of Hours and Earnings, containing updated figures, by the end of the year. Details of the analysis are available at www.4-consulting.com.
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