Hammond said that while public-sector pay had formerly “raced ahead” of private salaries, the gap had now closed. But, he added, public-sector pensions skewed the picture. “When you take into account the very generous contributions that public-sector employers have to pay in for their workers’ very generous pensions, they are still about 10% ahead,” he said.
Not entirely right because even absent pensions public sector pay is still a little ahead. A reasonable pencil sketch being that up to about 2002 pay was roughly equal (without considering those pensions and other perks), public sector roared ahead as G. Brown bribed everyone he paid directly, recession hit, public sector fell less than private in 2008-10, more since then.
The end result being that public sector pay rose more before the recession and fell less after it.
As to why pay fell, well, we’re poorer, that’s what a recession means.