Public sector pay increases “hugely out of control”

News Article - 23 May 2011
Category: Business

The pay gap in the public sector has risen faster than the private sector according to a report conducted for a think-tank.

The gap between equivalent workers in both public and private sectors was now at around 30 per cent based on hourly pay. The centre right Policy Exchange, who conducted the report, believes public sector pay is now "hugely out of control".

"It is unreasonable and unfair to expect private sector workers to make all the sacrifices.

"We need a much better-balanced system of public pay, with organisations like the NHS and schools given greater freedom to vary pay so they can attract staff but also get value for the taxpayer," said Neil O'Brien, Policy Exchange director.

At the same time as pay for public sector workers has risen 35 per cent for hourly work, real pay has fallen for the bottom 30 per cent of private sector workers.

Private sector businesses are likely to feel the pinch even further following the news UK inflation rates have risen to 4.5 per cent, up from 4 per cent in March. This latest increase has been attributed to a jump in transport costs, alcohol and tobacco.

As a result of private sector sacrifices TUC leader Brendan Barber predicts a host of pay freezes and additional job losses in the coming months.

"The Government's policies of deep, rapid cuts are doing grave damage to the whole economy, and ordinary workers in every kind of job are suffering the longest decline in living standards for decades."

Discontent and jealousy over public sector pay increases is likely to increase the pressure on HR departments in private sector businesses to appease employee demands.

HR software is adopted by many businesses across both sectors with the aim of supporting the entire employee lifecycle and streamlining communication between management and employees. Such systems are available as a standalone programme or integrated with a business' financials and payroll software.

Article keywords: Pay gap, Policy Exchange, public sector, private sector, Neil O’Brien, inflation rates, TUC, Brendan Barber, pay freeze, redundancy, HR departments, HR software, employee lifecycle, accounting software, payroll software

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