Think Tanks

« One-third of all welfare payments go to families with above average incomes | Main | 'Coalition capital gains policy will reduce revenue by £2.5 billion' »

Ten facts about the rich public sector and the poor private sector

What's the biggest divide in Britain?

The divide between north and south? Between black and white? Between the children of intact families and those of broken families? Or, as David Willetts has begun to argue, between young and old? All are testing divisions but one of the most politically potent divisions of our time is the divide between private and public sector workers.

DM180610j The divide is described as the "Great Jobs Apartheid" on the front page of today's Daily Mail.

The Mail is inspired by new research by Policy Exchange. Here are ten of PX's top findings:

  1. On an hourly basis, the typical public sector worker is now 30% better paid than the typical worker in the private sector.
  2. This pay advantage is not evenly distributed.  It is higher in lower grades, with the bottom 10% of public sector workers now 25% better paid than their private sector equivalents.
  3. The public sector wage premium is small in the South East and London, but  higher in Scotland Wales the North east and North west, where public sector workers enjoy a 17-20% premium.
  4. Over their lifetimes, people in the private sector work 23% more hours (equivalent to 9.2 years of a public sector employee’s working life) – where their public sector counterpart will either be on sick leave, holiday, strike or in retirement.
  5. Since 2002 the public sector wage bill has increased three times faster than the private sector wage bill, growing by 33% in real terms, or £67 billion.
  6. A remarkable net 97.7% of the increase in numbers of public sector workers has been in education and the NHS.
  7. The number of management positions has increased particularly rapidly in recent years - by over 80% between 2002 and 2009.
  8. Between 1997 and 2007, public sector productivity also fell, while productivity in the private sector increased by nearly 28% - leaving the former only two-thirds as productive as the latter.
  9. Over the last decade the redundancy rate in manufacturing or construction has been seven times higher than in the public sector, roughly defined. During the recession these multiples increased to 16 and 10 times respectively.
  10. Public sector employees have better pensions.  The difference is worth an extra 15% of their salary.

Screen shot 2010-06-17 at 23.51.04 Coincidentally, the Adam Smith Institute today calls for 270,000 public sector job cuts over the next five years. The report, by Tim Ambler of London Business School, proposes to protect so-called frontline staff (teachers, nurses, doctors, police officers and active armed forces personnel) but for 100,000 job cuts at the Ministry of Defence and another 50,000 job cuts at Iain Duncan Smith's Department of Work & Pensions.

Dr Eamonn Butler of the ASI commented:

“These numbers sound radical, but it is worth remembering that more than a million new public sector jobs have been created since 1997. And as for political feasibility, the Conservatives actually proposed to abolish 235,000 bureaucratic jobs in their 2005 election manifesto. Now that the public finances are in such dire straits, this must be firmly back on the agenda.”


You must be logged in using Intense Debate, Wordpress, Twitter or Facebook to comment.