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The Conservative Myth About the Public Sector Pay Squeeze

The public sector pay cap is an issue the government can’t seem to make to go away. The chancellor even reportedly said public servants were “overpaid” during a cabinet meeting. Shortly after the TUC responded pointing out that many public sector workers are thousands of pounds less well off than in 2010. But the government gives a disciplined bark back: public sector pay is higher than private sector pay. In other words, stop complaining. We look at the reality behind this claim.

Is it an appropriate comparison?

Nope, it’s pretty meaningless, just like comparing apples and oranges. The private and public sector are very different, they have different roles in our society, and the workers have different jobs. Therefore like-for-like comparisons aren’t appropriate. For example, 61% of public sector workers are in education and healthcare, and the same obviously isn’t true for the private sector. The private sector has a range of industries, from the low paid retail sector the high paid finance industry. This makes these comparisons a bit daft: how do you compare firefighters pay with a private sector equivalent? 

There is a further complication, in that a growing number of public service employees are outsourced to the private sector, often in roles such as care workers and admin staff - an issue we examined in our March Labour Market Realities video. A consequence of this outsourcing is that these lower paid positions aren’t included in calculating the public sector average, making it appear deceptively higher.

But overall, are public sector workers paid more?

By a fraction, and not for much longer. The gap between public and private sector pay is small and narrowing. The latest figures (April 2017) for total weekly pay were £501 for the private sector and £508 for the public sector. This is hardly a huge difference. With private sector pay increasing faster than in the public, if the 12 month average continues then the figures for June will show the former overtaking the latter, reaching £544 and £524 respectively. Will it then be acceptable for public sector workers to receive a pay rise?

Is there anything else behind the differences?

Yes. One factor is that the public sector is often doing things better. For example, it has a lower gender pay gap (and has for as far as records go back). As of early 2016, there are 184 councils that pay the living wage, meaning less people in poverty. Their respect for trade unions means that terms and conditions have been good for workers, and wages have historically collectively bargained. These are good things that the public sector is doing (and should be doing more of). Yet as they impact positively on workers’ pay, they are then twisted into justifications to punish these workers with real terms pay cuts.

In this respect, the sector is damned either way. Instead of attacking the public sector for the good things they have done, we need to be encouraging the private sector to follow suit.

But we can’t afford the pay rise…

Well, we can’t afford not to. We have stressed and overworked teachers, a growing proportion of whom are leaving the profession. We did a Labour Market Realities video on this issue back in June. Government analysis found the rate of secondary teachers dropping out of profession increased from 6.6% in 2011 to 8.7% in 2015. Union leaders are warning that it will get worse. 

The NHS is also struggling as a result of the pay freeze. There has been a net reduction in the number registered midwives of 5,047 between March 2016 and May 2017. In one survey, over half of the respondents (52%) were planning to leave because of staffing levels. And with nurses facing a real terms pay cut of 12% by 2020, the Health Foundation found that the NHS could face a shortfall of 42,000 nurses by the end of the decade.

At some point the cap will be lifted, we cannot go on decreasing the real terms pay of public sector workers year after year. The tragedy is that given that our public services are crumbling, an end to the pay cap might be too little too late. How many nurses can we afford to lose? What happens if there aren’t enough teachers or firefighters?

The government was bruised at the last election. Economic growth is slowing and real wages are dropping. Now they’re falling back on divide and conquer tactics. They’re blaming the public sector with deliberately misleading soundbites. We need to change the conversation on to how to increase real wages, not why 5.4m workers should have their pay decreased.