Private sector pay ‘to rise faster than public sector’

Frances colour

A report from the Institute for Fiscal Studies has said pay in the private sector is likely to rise faster than public sector wages in the next four years.

The independent research institute said the pay gap between public and private sector workers had nearly returned to pre-financial crisis levels.

For men, there is little difference, but women in the public sector get paid 8% more than private sector staff.

However, the IFS points out that pensions must be considered too.

It said that a large majority of public sector workers were saving into more generous defined benefit, largely final-salary, pensions. This compared with 12% of private sector staff on pensions of this kind.

The report said that at the height of the financial crisis, between 2008 and 2010, private sector pay fell faster in real terms than public sector pay.

This had reversed since 2010, when public sector pay fell faster after taking the rising cost of living into account.