Pay comparison between Britain’s public and private sectors: Ethnic, educated and ambitious? Go public, young man!
Posted on 3 September 2007
The study by Dr Karen Mumford (Department of Economics) and Monojit Chatterji (University of Dundee) shows that full-time male employees in the public sector on average earn £10.97 gross per hour while their private sector counterparts earn £10.073 per hour - a difference of 8.9 per cent. Each extra year of experience lifts hourly pay by more in the public sector than in the private sector. Ethnic minority workers earn a 9.3 per cent premium in the public sector whereas they experience wage discrimination of 7.5 per cent in the private sector. A larger proportion of public sector workers are in élite, high skill, white-collar occupations than in the private sector.
The most surprising result, however, is that pay is more variable in the public sector. The variance between workers’ hourly pay is 46 per cent greater for public sector staff than for their private sector counterparts. Given the greater prevalence of performance-related pay, bonuses and other incentive schemes in the private sector, the opposite might have been expected. There are several reasons. Contrary to popular perception, public sector managers are not 'taking the easy route’ by not differentiating between their staff when it comes to pay. The presence of a relatively large group of high flying, skilled white-collar employees also contributes to the greater higher variance, as does the use of seniority in many public sector salary structures.
"For ethnic minority workers, public sector employment has a beneficial double whammy," said Dr Mumford. "They avoid the wage discrimination found in the private sector and do better than their white counterparts in the public sector."
The research suggests that relative employment conditions have changed across the public and private sectors in Britain over the last decade, with the former becoming a more attractive earnings option. It no longer appears to be the case that the public service provides a refuge for the low skilled at the expense of the highly educated.
About the researcher
Karen Mumford is a Professor in the Department of Economics and Related Studies
Contact
Email: kam9@york.ac.uk