WIREDGOV

The difference in average hourly earnings between employees in the public and private sector was highest at the bottom end of the scale in April 2011, according to a report published yesterday by the Office for National Statistics.

This analysis is based on characteristics collected in the Annual Survey of Hours and Earnings (ASHE). These comparisons are inevitably not straightforward because of differences in the types of jobs and the characteristics of employees between the two sectors. Also, large organisations – those with 500 or more employees – tend to pay more than smaller organisations and the public sector has a higher percentage of larger organisations than does the private sector. A number of different results can be derived depending on the methodology that is used to calculate pay differences, and yesterday’s report gives estimates both including and excluding the effects of different organisation sizes.

Including the effects of organisation size and comparing the lowest earners at the 5th percentile – the value at which 5% earn less and 95% earn more – employees in the public sector earned on average 11.2% more than employees in the private sector. Comparing the highest earners at the 95th percentile – the value at which 5% earn more and 95% earn less, employees in the public sector earned on average 10.3% less than employees in the private sector. These differences are likely to be due to the private sector having more jobs paid close to the National Minimum Wage at the bottom of the pay distribution and having very high wages at the top of the wage distribution. Excluding the effects of organisation size, the lowest paid in the public sector earned around 15.1% more, and the highest paid 5.5% less, than their respective private sector counterparts.

Across the whole pay distribution – from the lowest earners to the highest – those in the public sector earned on average 2.2% more than those in the private sector when taking into account different organisation sizes, and 7.3% more when excluding the effects of different organisation sizes.

Regionally, the North East and Northern Ireland had the largest gaps in favour of public sector employees. In London those in the public sector earned less on average than those in the private sector.  When comparing the lowest (5th percentile) earners, Northern Ireland had the largest gap in favour of the public sector, followed by London which also had the largest gap in favour of the private sector for the highest (95th percentile) earners.

A podcast giving more background on this analysis in available on the ONS Youtube channel at www.youtube.com/user/onsstats

Background notes