Sunday, 15 May 2011

Public Sector Pay - statistical quackery posing as academic research..again

At the beginning of this week the "thinktank" Policy Exchange mused about public sector pay. They claimed to have discovered, through rigorous research of course, that public sector workers are paid 40% more than private sector workers. Startled? Of course you are! Does this claim stand up to even a moment's serious scrutiny? Of course it doesn't! But maybe that's not the point.

This remarkable figure is derived from the simple measure of comparing the average hourly pay of the two sectors....yes gets no more sophisticated than that. The PE "research" fails to actually compare like with like. No account is taken of the fact that the public sector workforce is on average more highly qualified with a greater proportion of skilled workers and professionals. No attempt is made to compare a job with anything approaching a similar job in each sector. As one commentator has observed, it's like comparing the pay of a neurosurgeon with that of a bartender and concluding that the neurosurgeon is overpaid!

Of course, in many cases no such comparison is possible, as some jobs are only done in the public sector and some only in the private sector, but PE don't even try.

If you take a job that is done in both sectors - teaching, the PE would have you belive that a teacher in the independent sector is earning 40% less than a teacher in the state sector. That's a pay differential of some ten to fifteen thousand a year. Is this credible? Would independent schools ever be able to attract any teachers with a pay gap that wide?

Local authority-employed cleaners, who earn barely more than the minimum wage, are earning 40% more than cleaners in the private sector? Would PE care to inform us which cleaning firms are breaking the law?

The Institute for Fiscal Studies says that the public sector "premium" is more like 6%, but even that is most likely due to the fact that gender discrimination in the public sector is being eliminated in the public sector to a much greater extent than in the private. There is also the fact that many of the lowest paid public sector staff have actually been contracted out to the private sector, which further distorts the figures.

What is really happening is that "think tanks" like Policy Exchange are in reality making a political attack on public sector workers. It's all about softening up public opinion to make workers in both sector easier to divide.

No comments: