Faster wage growth for private sector

Private sector wages are likely to rise faster than those in the public sector during the next 5 years, a report from the Institute for Fiscal Studies (IFS) has found.

The economic research body said that the pay gap between the public and private sectors has returned to pre-crisis levels.

The report found:

  • pay for women is 8% higher in the public sector than in the private sector
  • men in both sectors are paid similar wages
  • low earners and those with low levels of qualification do better in the public sector.

The report also highlights differences between private and public sector pensions. Most public sector workers are members of defined benefit (DB) schemes, compared to just 12% of private sector workers.

Jonathan Cribb, research economist at the IFS, said:

"The biggest difference between public and private sectors remains the value of employer contributions to public service pensions. These are on average, much more generous in the public sector than in the private sector. Over the last 15 years, changes in the gap between total remuneration in the public and private sectors has been driven more by the changing value of pensions rather than headline pay. Pay and pensions need to be considered together."

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