Private sector workers get more pay – sometimes a lot more

Soldiers, civil servants, prison officers, the judiciary and many other people working in the public sector will all see their salaries rise by 1 per cent in the next year, the Treasury announced this week.

Unions say it is too little – less than the rate of inflation. Small-state Tories and some voices in the private sector say it is too much.

How does public sector pay compare with the private sector?

The current best estimate is that private sector workers get paid more than public sector workers by between 1.3 per cent and 2.4 per cent. That is not very much, but look at different parts of the pay scale and differences are much more pronounced.

Private sector better at the top, worse at the bottom

But it is not an even distribution. Public sector pay is more bunched in the middle, while private sector pay is more unequal, lower at the low end and higher at the high end.

That is why, if you count it one way – and take the average known as the mean – private sector pay looks higher.

If you count it another way and take the median wage – the salary found in the exact middle of the pay range – public sector pay looks better.

It produces this table, as created by IncomeData.

Though the private sector is significantly better paid for people at the top, the public sector is better for people at the bottom.

At the top of the scale are the top 1 per cent of earners in the private sector, who take home more than £60.21 per hour. That is considerably more than the top 1 per cent of earners in the public sector, who get £49.65 per hour.

The private sector is slightly better for the top 5 per cent of overall earners too, though it starts to level out.

At the bottom it is a different story. The bottom 5 per cent of workers in the public sector earn £7.19 per hour. In the private sector, the bottom 5 per cent of workers earn only £6.19 per hour.

Public vs private sector – in three jobs

The main difficulty in making comparisons between the sectors is that it is very difficult to find jobs that are really comparable – one reason why the ONS will not produce the data. But after digging in ONS data and doing some separate research, we have matched three jobs in the public sector with their approximate equivalents in the public sector. Who gets paid more?

Admin positions – public sector wins

Data from the ONS distinguishes between administrative positions in the UK generally and administrative positions in government.

Administrative position in government [public sector] – earned an annual median salary of £19,460 in 2012.

Administrative positions overall in the UK [private sector] – annual median salary of £17,859 in 2012.

Public sector wins by 8 per cent

Mid-level managers – private sector wins

The story is different for mid-level managers, but only just. These jobs are not a perfect comparison, as the sectors are different, but they do indicate the rough rewards for a similar level of managerial responsibility, and are taken from the ONS.

Managers and directors in Health and Social Services [public sector] got an annual median salary of £41,151 in 2012.

Managers and directors in Financial Institutions [private sector] got an annual median salary of £45,921 in 2012.

Private sector wins by 10 per cent

Chief executive position – private sector wins

Unfortunately, ONS data does not split CEO earnings into public and private sector, so we have had to pick two example CEO salaries – from an NHS trust and from a private company with an equivalent number of staff.

The chief executive of Barts Trust, England’s biggest NHS trust [public sector] with 15,000 employees, is CEO Peter Morris who got £275,000 in 2012-3.

As a rough equivalent, the CEO of British engineering company IMI plc runs a company of 12,000 [private sector] . CEO Mark Selway is on a base salary of £750,000 – plus shares and pension options.

A private sector win of 63 per cent.

For more on the many difficulties of comparing jobs in the different sectors – read this report.