Thursday, 19 June 2008

Public versus private - who did better?

Yesterday, I posted my views on the implausibility of wage restraint here in the UK. The post generated some lively comments. The relationship between private and public sector wage growth was one contentious issue.

I thought it would be useful to see how wages in each sector changed over the last couple of years. Between 2001-8, average earnings in the public sector increased by 34.3 percent, while the growth rate for private sector earnings was 30.7 percent. So, public sector workers have gained on their private sector colleagues since New Labour started to ramp up public sector expenditure.

Public sector wages grew more rapidly between 2001-3. More recently, private sector wage growth had a slight edge. However, the most recent data shows both sectors enjoying a virtually identical growth rate.

Perhaps the most interesting observation is that the most recent data suggests that both sectors were recording wage increases that were below the retail price inflation rate.

So it doesn't seem to matter whether you work in the public or private sectors, wages adjusted for inflation are falling.


Jeff said...
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Jeff said...

It would appear that British workers are already engaging in pay restraint. But for how long?

powerman said...

They both trend upwards as expected, but in the second graph quite a lot of the time public and private sector pay move in opposite directions within a defined band between 2% and 6%.

Does this mean they could be decoupled in the way I thought ?

I still don't know. I'll try and find some data of my own that shows the same stuff over a longer timespan (ideally over a few decades so we can see the trends across different political climates).