Is pay higher in the public or private sector?

23 November 2017

Public sector workers earned 1% less per hour, on average, than private sector workers with equivalent characteristics in 2016, according to initial Office for National Statistics (ONS) analysis.

The ONS analysis shows that public employees had out-earned their private sector counterparts by 4% per hour in 2010, before the introduction of the public sector pay freeze. This began in 2011 for all but those on salaries below £21,000.

Since 2013, most annual public sector pay rises have been limited to an average of 1% per year so has risen more slowly than inflation on average.

By taking characteristics such as age, experience and occupation into account, the analysis allows a like-for-like comparison between public and private sector workers. Ignoring those factors and looking at average pay on its own, public workers earned 13% more per hour than those in the private sector in 2016.

Roger Smith, ONS statistician in the earnings branch, explains the difference between the two measures:

“Average pay is useful for comparing groups of workers, but it doesn’t take into account the characteristics of workers and jobs. When we do take these things into account we get a better idea of relative pay between private and public sector employees. This is done using mean pay per hour (excluding overtime), so not taking into account number of hours worked or additional benefits like pension contributions, company cars or health insurance.”

BBC news reported about research conducted earlier this year which suggested that some public sector workers are thousands of pounds worse off compared with 2010, before the introduction of limits on public sector pay.

Because of the restrictions on pay, inflation has generally outpaced public sector pay growth since 2011, meaning that public sector workers have grown poorer in real terms over the last six years. With inflation currently at its highest since April 2012, the government has recently lifted the 1% pay cap for some workers.


Are you interested to know whether your wages are keeping up with inflation? Use the ONS calculator to find out.