Some thoughts on Public vs Private Pay Comparisons

http://www.bbc.co.uk/news/business-13329634

News articles like this are very misleading. One might well report that police officers earn more than McDonalds employees, which is largely what it says.

Neither public nor private sector are homogeneous, and there are few jobs that are directly comparable. In general most of the low-skill jobs in the public sector have been contracted out and now exist in the private sector. There are also generally higher levels of qualification in the public sector, meaning that that the balance of job weight is probably different from the private sector. The only way one can scientifically compare wages between the sectors would be to look at those jobs where there is a broad comparison and job weight can be taken into account. This survey doesn’t do that, and all it does is falsely scapegoat public sector workers.

For the record I am a senior manager in the civil service, my pay is less (in cash, not just real terms) this year than last year, and was less in 2010 than in 2009. All thanks to the performance related pay being cut by the new government. I was in the top 25% of performers in 2009, and top 10% in 2010, I’m certainly in a similar position this year, but there are no bonuses – even though my team will have ‘saved’ millions of pounds by planning restructuring in our area.

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