A study by the CSO into the public/private sector pay differential for 2009 and 2010 shows that the premium for public sector pay, reported as 11.9% in 2009, decreased to 1.3% in 2010 after a full year application of the public service pension levy and additional pay cuts introduced in December 2009.

Quarterly CSO figures on earnings are based on gross pay and do not take account of the effect of the pension levy. This study provides, for the first time, a comparative analysis that takes account of the effect of the pension levy on pay.

The publication provides an in-depth analysis, providing different results depending on the weighting of data and the size of the organisation. Unlike a lot of news coverage on the public and private sector pay differential, there is no single figure that captures the difference in pay.

Direct comparisons are difficult as many occupations do not exist in both sectors, such as hospitality, prison security, teachers and Gardaí.

Pay cuts for those earning €65,000 and over, alongside increment freezes under the terms of the Haddington Road agreement, are excluded from the analysis, and suggest that the public sector pay premium is likely to have fallen further since 2010.

However, the study reveals the following:

• On a ‘like-for-like’ comparison, taking account of organisational size, many private sector workers earn more than those in the public service, and this is particularly noticeable in the top 20% of earnings distribution.
• Male workers in the private sector, on a ‘like for like’ basis, earn more than their public service equivalents
• The gap for male workers in favour of private sector workers is even larger if commercial state bodies are excluded from the analysis
• In general, the public sector pay differential was highest for those on lower earnings
• The analysis reveals that a higher concentration of women working in low paid occupations in the private sector (retail and hospitality in particular) means that women working in the public sector are, on average, paid more than women in the private sector.

Writing in the Irish Times, John Fitzgerald said that the higher pay differential in favour of women working in the public sector may be partly explained “by the fact that there is better de facto protection from discrimination in the public sector. It may be that women in some areas of the private sector are not receiving compensation commensurate with their skills and experience.”

Other CSO data shows that, since 2010, average hourly earnings in the private sector have risen 2.5% whereas they have fallen 2.5% in the public sector.

Size

The CSO analysis also reveals the importance of size in determining the pay differential. This assumes that the larger the organisation, the higher the pay. Public sector employments tend to be larger than the average in the private sector.

Including the size of the organisation as a factor, the CSO figures show that the average public sector pay premium was 13.5% in 2009 and this drops to 9.7% in 2010. When size is excluded, the average public sector pay premium is shown at 21.7% in 2009 and drops to 19.1% in 2010.

In his analysis, John Fitzgerald said the evidence suggests that, on average, pay rates in the public sector are now close to those in the private sector, with those on higher incomes probably earning significantly less than corresponding private sector workers and those on lower incomes probably still marginally better off than those in the private sector.

Related: Blog: There’s a good reason for the private-public sector pay gap – IMPACT website (1^st September 2014)