So public sector pay has been falling, eh?

Public sector workers are £2,245 worse off as a result of the coalition’s austerity policies, according to the Trades Union Congress.

NHS staff, teachers, firefighters and local government workers are among those that have lost out following pay freezes and limited pay rises since the government took office, the TUC said.

Perhaps the public sector was overpaid before? And that thus a reduction in their wages compared to the private sector was due?

Average pay in the public sector is certainly higher than it is in the private. To which the usual response is that the public sector has, on average, higher qualifications so such higher pay is justified (note that this argument is, for some reason, not acceptable for use when discussing the gender pay gap).

Fair enough we might say. Now add in the massively larger pensions accruals (and pensions are only deferred pay) and the hugely greater job security (yes, this is a component of wages) and public sector pay is, even correcting for formal qualifications, very much higher than private sector.

So, public sector pay has been falling? Good.

34 comments on “So public sector pay has been falling, eh?

  1. I’ve never heard anyone make the argument that public sector employees have higher qualifications.

    The argument that is made is that public sector jobs overall demand higher qualifications. Public sector jobs, especially in these days of outsourcing stuff like cleaning, are graduate entry (teaching, nursing etc) whereas the private sector has a higher share of minimum wage (cleaning, catering etc).

  2. In the US Federal government, the pay of the lowly is higher than outside government, the pay of the highly qualified is lower. Might the same be true here?

  3. > those that have lost out following pay freezes and limited pay rises

    I’m sure those private-sector workers who have had actual pay cuts will be brimming with sympathy. A limited pay rise? Diddums.

    Shinsei1967,

    > I’ve never heard anyone make the argument that public sector employees have higher qualifications.
    > The argument that is made is that public sector jobs overall demand higher qualifications.

    Er, they’re the same argument. You can’t have the latter without the former.

    It’s not much of an argument anyway, since so many of the qualifications are union protectionism. “Filing clerk wanted. Must have an NVQ in office administration. … Look! Even our lowly filing clerks are more highly qualified than yours!” All this shows is that the private sector are willing to recruit based on actual ability whilst the public sector believe that third-party certificates trump ability. How the hell that justifies higher pay, I do not see.

    My ex used to work in an NHS department where they had a secretary who was the only person allowed to do anything on the computer, because she was qualified: she had one of these crappy public-sector qualifications that proved she’d been on a brief course about using Word. In this age of everyone having a computer at home and being familiar with the basics, no-one was allowed even to write a letter to a patient without the special qualification. When the secretary was off sick once, my ex needed access to the records, so got on the computer. Turned out that the filing system used by the qualified expert involved starting a new letter by sticking a page break at the bottom of the previous one: there was just one giant Word document with every single letter in it. No folders, no dates.

    I have no doubt that the secretary’s pay reflected that she was more highly qualified than her private-sector equivalents, who are no doubt hired on some flimsy pretext like actually knowing what the fuck they’re doing.

  4. And I’m not sure about the hugely greater job security. Maybe once upon a time but surely no longer.

  5. This private sector versus public sector “conflict” is childish.If the public sector don’t do the jobs, private sector workers have to do them instead , with no guarantee they will do them as well or with any residual savings. The NHS is the best value for money system in the world according to American comparators. British people would not be able to pay for private sector health/education and the things that matter.All that making people work for no works pension ,no job security and breadline wages in the private sector does is reduce demand, no matter how much you improve supply .As Major Douglas said Economics is making sure there is enough money in people’s hands to buy the goods churned out by machines.Cut wages and you cut demand.

  6. Reed: A large number of public sector activities are carrying out the oppression of the state. A huge raft of such jobs could go and would not need to be replaced. No one would voluntarily pay for scum like HMRC to rob them.
    The jobs that might still be needed–NHS whatever–have been seized by the state (yes there is private medicine but not much because average people can’t afford to go private and pay the states thieving taxes as well) and could go back to the private sector.
    As for the supposed poorer quality jobs in the private sector–no pensions etc. Well decades of immigration undercutting wages+state created regulation etc massively raising business costs and keeping job numbers down+minimum wages unemploying the young+inflation undermining the coinage and jacking up prices etc etc–those might have something to do with it.
    Also–cut wages =cut prices of goods. If artificially high wages=more production were correct we could just increase the minimum wage to £1000 an hour and we’d all be rich.

  7. > If the public sector don’t do the jobs, private sector workers have to do them instead

    If only that were true. If the state sector were mainly doing stuff that needed done, the state would be a tiny fraction of its current size. The reason for most of the resentment that you regard as childish is that members of the public are constantly coming into contact with overpaid little Hitlers doing literally worthless make-work jobs.

    If there were no state-sector worker insisting that an acquaintance of mine who has the use of only one limb not be allowed out into her own garden until she has the relevant driving licence (for which there is a months-long waiting list) for her 3mph motorised wheelchair (which she has probably been driving for longer than said little Hitler has been alive), no, some private sector worker wouldn’t have to do that job instead. The job would not be done at all, and the world would be better for it.

  8. I used to be a civil servant (in the Inland Revenue = equals part of the much-loathed HMRC) and my colleagues were on the whole certainly not highly qualified at all – they tended to have left school, drifted into the Revenue and stayed there. There certainly were graduates (I was one) but a lot of them were over-qualified for the jobs they did (I certainly was) and had ended up in the public sector because they’d been booted out of the private or had extreme left-wing views that hadn’t been acceptable in it. There are and were exceptions – tax inspectors, for example, tend to be educated and very sharp – but the bright ones escape and go to work in something more demanding and intellectually stimulating.

  9. @ Squander Two

    Don’t knock that secretaries’ certificate. It was going on the course that tought her what a page break is. Without that she’d have gotten to each new page via the space bar.

  10. I used to have to either fill in a form or (my preferred way) record the letter on the telephone system for the typing pool. What would take me 4 or 5 minutes altering a standard letter to required details instead took around 2 or 3 days and involved any corrections going back for another day or two. rarely had corrections using the phone system – the typist for that was blind and had pretty much no errors.

    This was back in the early and mid 90s, had been using a word processor myself since 1983.

  11. he NHS is the best value for money system in the world according to American comparators.

    British people are the slimmest in the world according to American comparators. Unfortunately, the world consists of more than two countries.

  12. There was an argument recently on another blog that tried to claim that the public sector workers were paid a couple of percent less than private sector workers once you adjusted for qualifications, experience (for which I suspect they use age as an indicator) and “size of establishment” (apparently bigger firms pay higher wages than small ones so working for the NHS means you should get paid more just because it is the biggest employer in the country) but ignoring pensions. When I pointed out that public sector pensions were worth more than 30%, possibly 40%, of salary for females,(easy to show for LGPS where accrual rates are now one-forty-ninth average salary and female life expectancy at retirement is 25 years) whereas the charge to members is only a few %, the guy was astonished: he had no idea.
    The public sector remains substantially overpaid.

  13. @john77:

    Indeed. And the standard response to that is to attempt a diversion by pointing to the “low” average pension in the public sector, which doesn’t illustrate average service period, accrual rate or contributions made.

  14. > experience (for which I suspect they use age as an indicator)

    Suspect? Oh, they do, they do. Worked for British Gas Services, who, since privatisation, had adopted the private-sector practice of promoting based on ability rather than number of years with the firm. You should have seen the conniptions this caused in the old hands. How dare they? How can the sixty-year-old and profoundly stupid Deirdre possibly be expected to obey an intelligent and organised team leader in her twenties who’s only been here two years? And, of course, Deirdre wouldn’t obey her team leader, on principle.

  15. “Employers pay what they have to pay to attract and retain people who can do what they want done.” – GC

    Qualifications per se are irrelevant. What’s relevant is is there anyone else available who can do the job for less money. If the state has lots of applications for employment on file, they are paying too much.

  16. To which the usual response is that the public sector has, on average, higher qualifications so such higher pay is justified

    If C Northcote Parkinson were around today I’m sure he would have a law for that as well.

  17. Don’t forget the regional factor. Public sector jobs in the southeast are possibly underpaid (almost certainly if you ignore pensions), whereas in much of the rest of the country they are noticeably overpaid. Evidence for this can be found in e.g. number of applicants per job, difficulty in filling vacancies, and staff turnover.

    However the biggest factor remains pensions. The collapse in real interest rates mean that defined-benefit pensions are worth ever more.

  18. @ Squander Two
    That attitude is not limited to the public sector. Many moons ago, when I was young and innocent, I was made temporary acting head of section when the section leader was on secondment which provoked a months-long tantrum from the worst worker in the section who thought she should be put in charge because she was older than I despite (i) I knew the work far better than her, and, importantly for someone checking others’ work, I had a negligibly error rate while her error rate was significant, (ii) I had more experience – actually been working there before she joined the company (iii) I was prepared to work the extra hours to get the job done while the team was one member short and she wasn’t. At one point the local feminist felt it necessary to defend me.

  19. In one certain major oil company where croissants are eaten during meetings, if you plotted a graph with age on the X axis and job ranking on the Y axis, it would be a straight line. Competence doesn’t even remotely come into it.

  20. @tim newman

    ‘…where croissants are eaten….’

    Where the hell could that be??????

  21. All this nitpicking over private/public pay differentials.
    Tsk!
    Public sector pay comes out of taxpayer’s pockets. Your pockets.
    Public sector pay is falling!
    The price of beer is falling! (wish)
    Rejoice! Who cares why? Just rejoice!

  22. “…To which the usual response is that the public sector has, on average, higher qualifications…”

    As can be seen by the truly Herculean results they always achieve and the amazing savings they make with taxpayer’s money and …

    *chuckles*

    Sorry. Tuens out I can’t type this with a straight face!

  23. I’ve never heard anyone make the argument that public sector employees have higher qualifications.

    The Scottish Government make this argument quite explicitly in their propaganda pamphlet explaining why public sector employees in Scotland (2013 figures) have a median income of £29,439. This compares (for various reasons already discussed) with a private sector median income of £24,603.

    The only decile, for Scotland, where private sector incomes exceed that in the public sector is the top 10%. And that is only by around £5k (I’d like to be more accurate but they gave a graph for all bar median. 2013 figures.)

  24. “If the public sector don’t do the jobs, private sector workers have to do them instead , with no guarantee they will do them as well”

    If there is anything the existence of a private school system has shown us, it’s that they can never educate kids as well as the benevolent state.

  25. @G
    I suppose with a pupil capitation rate of £30,000 pa and very few kids on free school meals the private schools should do quite well. And George Osborne doesn’t know his times tables.
    It’s a matter of value for money.

  26. @ dearieme
    My job did not include typing – in fact I wasn’t allowed to type: any messages had to be handwritten and delivered to the typing pool.

  27. @ DBC Reed
    *Stephen Byers* did not know his times table.
    Try getting your facts right – just occasionally.

  28. @J77
    If you weren’t so totally convinced you were right about everything , you might have taken the elementary precaution of typing George Osborne times table into Google and so would have come up with the widely reported story (circa 3 July) of the expensively educated Osborne flunking 7 X 8 .
    This is the second self inflicted embarrassment you have caused yourself in this comments section :see dearieme above.

  29. @ DBC Reed
    What the papers said was that Osborne sidestepped the question whereas Stephen Byers, when a junior education minister got it wrong.
    So NO your insult is just wrong, as usual.

  30. @J77
    So Osborne knew the answer but sidestepped the question for sophisticated political reasons. Is that it?
    Just drop it.

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