State jobs pay 20pc more than private sector
Friday December 19 2008
THE Government was under increasing pressure to cut public sector pay last night as shocking new figures revealed State workers earn on average 20pc more than those in the private sector.
Influential economic thinktank, the Economic and Social Research Institute, said the difference in pay increased from less than 10pc in 2003 to over 20pc in 2006 "following the series of pay setting rounds in the intervening years".
The ESRI said the large differential in pay rates would suggest pay for those in the public sector could be cut without impacting on the ability to retain staff.
"Taking into account factors such as the education and experience of employees in both sectors, the public sector wage advantage appears to be over 20pc," the ESRI report said.
Gloomy
"Given this, it seems highly unlikely that any wage reductions in the public sector would, in general, lead to any significant challenges in terms of retaining or recruiting staff."
The ESRI said the national pay deal may have to be re-examined in light of the deteriorating economy.
Citing their gloomy economic predictions for next year in which they forecast that the Government debt will almost double from 24.8pc of the Gross Domestic Product (GDP) in 2007 to 47.5pc of GDP next year, the ERSI said the public purse will be hard-pressed to pay the 3.5pc wage increase next September that was promised in the national pay deal.
"We argue that the social partners need to come together and to reassess the most recent pay deals in the light of rapidly changing circumstances," the ERSI said.
At a time when the private sector is likely to have zero wage growth -- if not widespread wage cuts -- next year, it is incumbent on the Social Partners to share the pain with everyone else, the ERSI said.
"The possibility of pay cuts in the public sector should at least be considered in this context as pay cuts may well be considered preferable to cuts in services," the statement read.
"As well as protecting service levels, the pay adjustment approach could well yield expenditure savings more rapidly than an approach based solely on job cuts through natural wastage, early retirements and redundancy schemes."
The ESRI said public sector employees account for about 22pc of the workforce and the wage bill accounts for over a third of total current public expenditure.
"In the last decade or so, Ireland has experienced substantial growth in earnings across the labour market, although the rate of growth has been more rapid in the public sector," it added.
- Allison Bray
