Public sector workers earned 1% less per hour, on average, than private sector workers with equivalent characteristics in 2016, initial ONS analysis shows.
What is the public sector pay freeze?
The public sector pay freeze began in 2011 for all but those on salaries below £21,000.
Since 2013, most annual public sector pay rises have been limited to an average of 1% per year.
The analysis shows that public employees had out-earned their private sector counterparts by 4% per hour in 2010, before the introduction of the public sector pay freeze.
By taking characteristics such as age, experience and occupation into account, the analysis allows a like-for-like comparison between public and private sector workers.1
Ignoring those factors and looking at average pay on its own, public workers earned 13% more per hour than those in the private sector in 2016.2
Taking worker characteristics into account, private sector pay has overtaken the public sector
Difference in mean pay per hour (excluding overtime) between public and private sector workers expressed as a percentage of private sector pay, April 2004 to April 20163
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Roger Smith, ONS Statistician in the Earnings Branch, explains the difference between the two measures:
"Average pay is useful for comparing groups of workers, but it doesn't take into account the characteristics of workers and jobs. When we do take these things into account we get a better idea of relative pay between private and public sector employees.
"This is done using mean pay per hour (excluding overtime), so not taking into account number of hours worked or additional benefits like pension contributions, company cars or health insurance."
Are public sector workers getting poorer?
Recent research has suggested that some public sector workers are thousands of pounds worse off compared with 2010, before the introduction of limits on public sector pay.
Use our calculator to find out whether your wages are keeping up with inflation.
Because of the restrictions on pay, inflation has generally outpaced public sector pay growth since 2011, meaning that public sector workers have grown poorer in real terms over the last six years.
With inflation currently at its highest since April 2012, the government has recently lifted the 1% pay cap for some workers.
Public sector pay growth and inflation, 2006 to 2017
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As well as seeing their pay rise more slowly than inflation, public sector workers have lost ground relative to the private sector since 2013.
Public and private sector pay growth, 2006 to 2017
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Pay in the public sector has risen by an average of 1.1% per year since April 2011, below private sector pay (2.1%) and inflation (1.9%), but above the 1% cap.
Why has pay grown by more than 1%? Because there’s been a notable shift in the makeup of the public sector in recent years, which isn’t captured by looking at average pay or pay growth alone.
The public sector workforce is shrinking, with some lower paid jobs shifting to the private sector
There were 5.4 million public sector workers in June 2017, down by 16% from 6.4 million in September 2009.
During the financial crisis of 2008 to 2009, around 250,000 workers joined the public sector as Lloyds Banking Group and Royal Bank of Scotland were nationalised.
However, since the recession, the public sector has lost chunks of its workforce to the private sector.
Size of public sector workforce, 2006 to 2017
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The net result is that the proportions of public sector jobs within specific professions has changed. Nearly 30% of public sector workers were employed in health and social care in 2010, increasing to 34% in 2017.
Health and social care is a relatively well-paid profession in the public sector, with average weekly earnings of £555 in September 2017. Education professionals earn much less per week on average (£413).
The earnings gap between education and other public sector areas - public administration and health and social work - has grown over time. It widened particularly in 2012 when sixth form and further education corporations in England moved to the private sector.
Mean weekly pay by public sector area, 2000 to 2017
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Since the recession, London is the only UK region to have seen a rise in public sector employment
While public sector employment has contracted across the UK as a whole, London is the only region to have seen an increase. Average public sector weekly earnings in London are nearly 30% greater than the next-highest paying region (Scotland), so this increase has dragged up the average across the UK.
Change in public sector employment between 2008 and 2017
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Public sector employees are more experienced and higher skilled than before
Public sector workers are staying in their jobs for longer than before, with the average rising from 8.7 years in 2004 to 9.8 years in 2017. In contrast, private sector workers are less experienced, having stayed in their jobs for an average of 6.7 years in 2017 (compared with 6.4 years in 2004). The longer someone stays in their job, the more they earn on average.
Meanwhile, whereas the skill profile of jobs in the private sector has remained broadly unchanged over time (45.7% high-skilled jobs in 2004 compared with 47.6% in 2017), the public sector workforce has become more skilled.
Skill level of public sector service jobs, 1997 to 2017
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Footnotes:
- ONS has published comparative estimates based on two different statistical models. Those quoted here are based on a model that controls for variables like region, occupation, age, gender and job tenure. The alternative model – which produces lower relative pay estimates for the public sector - also incorporates organisation size. ONS is developing this way of looking at differences between earnings; similar analysis by the Institute for Fiscal Studies has shown slightly different results.
- Figures are for full- and part-time employees combined.
- Difference between average public and private sector pay is based on pay for each April. Difference after accounting for worker characteristics is adjusted to include bonus received throughout the year. The difference between public and private sector pay is based on 2016 revised Annual Survey of Hours and Earnings (ASHE) data, while the difference accounting for worker characteristics is based on 2016 provisional ASHE data.