So, public sector pay is back on the radar. The publication by the CSO of the recent public/private sector pay comparisons has given rise to the usual outpourings from the organs of media billionaires. The facts on the face of it seem stark : see the graph. However, beyond the bilious soundbits of bitter hacks, a different, complex, story emerges. That there is a wedge, whereby public sector pay is on average greater than private, is a fact. The issue is why : some may simply think it to be capture of the coffers, others might note that one is comparing apples and tomatoes.

Why might one cohort get more pay than the other? Lets see : in 2012 the CSO noted a number of things, based on a detailed analysis of the 2010 National Employment Survey. In case people think “aha, but that was then, this is now”… wait.In summary

on average, public sector employees had higher educational attainment, longer service, were older, and were more likely to be in professional jobs than their counterparts in the private sector

There are significant compositional and attainment differences. Simply, there are very few zero hour contract retail and distributional employees in the public sector. There are many more professional and personal service workers. And there are many more public sector workers with degrees.

Bizarrely, people, regardless of public or private sector, have higher earnings the higher the educational attainment.

Now, there is a wedge. That is a fact. See here, page When you consider that there is in general greater security of tenure for public sector employees and greater certainty about pensions, then that gap shouldn’t exist. People will pay for that level of security. Adjusting for a variety of the attributes, such as size of organization, age, education etc, we find that the gap persisted. However rather than the 45% gap that exists in 2010 when we look at the raw averages, when we in effect compare like with like we find a smaller but still real gap.

A few things are worth noting. First, the gap has been narrowing over time. We will rever to this later. Second, the gap is higher for female than for male employees. Third, the gap is smaller for the main working cohort – those aged between 25-59, than overall. But gap there is. Or was. Might it be gone? There is good reason to suspect that for the civil, as opposed to the wider public, service, this gap may be gone or nearly gone.

From a contact in the Civil service I obtained a nicely detailed set of civil service pay scales from 2001 through 2013. This shows the full impact of all the various benchmarking, pay rises, cuts, levies etc. It is not 100% complete as it does not cover all grade variations (there are for instance three levels of secretary general, this one looks just at the top. The overall however is interesting.

A civil servants gross pay is, in 2014, back to 2006 levels. Tax revenue for the state is back to around 2005 levels, so that makes some sense. However, when you factor in both the impact of the Pension Levy & the Haddington Road increase in hours, pay is equivalent to pay in 2004. Since Dec 1st 2001 the typical civil servant, after the impact of all the rises vs all the cuts are accounted for, is up 18%. For comparison, the Contributory OAP is up 89.92% (€121.26 to €230.30) and for comparison, the Sunday Independent price is up by a minimum of 65.71% in the same time . The dataset is available here in excel format, and any errors etc I would be grateful to be appraised of. Compared to 2010 when we take into account the pension levy etc we find that the wage rates are down by between 4% and 15%, top and bottom. If you factor in the increased hours requirements the effect is to reduce the rates against 2010 by between 10% for EO’s and 20% for the higher grades. An analysis like the one done in 2012 of civil service rates might, just might, conclude no gap. As for the wider public sector, my bet is that the gap is narrowing but extant.

This ignores a bunch of other issues. There are good reasons why we would want to have security of tenure in the civil, and indeed wider public sector. Without those, we would rapidly devolve into a politicised service. Does anyone think that Marie Mackle or Morgan Kelly would be working without security of position? Then there is the issue of public spending, a very large part of which is pay. We should want to have public spending, at whatever level we think is ‘right’ to be more stable than the economy. It should act as an automatic stabiliser. Procyclicality in all things is not a good thing.

This debate will run. For some, any wage in excess of zero for any public sector worker is too much. For others, no wage is high enough. In the end, its a political not an economic decision.