|>>|| No. 413276
Omg tax the rich and everything will be freeee!
- After controlling for differences in workers’ characteristics such as education and experience, there is little difference between the pay of public and private sector workers. Continued public sector pay restraint would likely push pay in public sector relative to the private sector to historically low levels.
- Compared to private sector pay, public sector pay is lowest for highly educated workers. For the almost two-thirds of public sector workers who have completed higher education, pay is slightly lower compared to the private sector than it was prior to the recession. This group has also seen particularly large increases in the contributions they have to make to their workplace pensions. Public sector pay is also lowest compared to private sector pay in London and the South East.
- It is therefore among better paid and higher educated public sector workers – such as teachers or senior civil servants – and those working in London and the South East, that we might expect greater recruitment and retention issues and a more pressing need for pay increases.
- Public sector workers continue to receive considerably more valuable workplace pensions than the private sector on average. In 2016, 83% of public sector workers received an employer contribution to their pension worth 10% or more of their salary, compared to only 11% of private sector workers.
- Relaxing the pay cap and increasing public sector pay in line with inflation or private sector pay would cost public sector employers around £3 billion a year in 2018–19, rising to around £6 billion a year in 2019–20. Because of the relative sizes of the workforces, the cost of increasing pay for police or HM Forces is much smaller than increasing pay in the NHS, schools or the civil service.
Jonathan Cribb, a Senior Research Economist at the IFS, and author of the report, said,
“The government is considering lifting the public sector pay cap for at least some workers. If it decides to maintain the 1% cap, we should expect increasing difficulties in recruiting, retaining and motivating high quality public sector staff, reducing the quality and quantity of public services. But increasing pay for these workers implies substantial extra costs to public sector employers. The Treasury could provide extra funds for this by raising taxes, cutting other spending or borrowing more. Asking the NHS, for example, to fund higher pay increases from within existing budgets would be very challenging.”
(A good day to you Sir!)