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Public sector pay ‘outstrips private workers by 40pc’

Public sector workers get paid 40pc more on average than their private sector counterparts, a report claims.

By contrast, in the UK public sector pay is almost on a par with the private sector, with Ireland’s public/private pay gap high by European standards, the paper states.

The study by Davy Stockbrokers argues that any future growth in public sector pay should at most only match pay rises in the private sector.

“Ideally, the pay gap should close over time,” wrote Davy economist Conall Mac Coille, author of the report.

“Public sector pay rises should also be conditional on the on-going performance of the economy and tax revenues, guarding against the risks from Brexit, corporate tax reform and other economic uncertainties.”

The report notes the average public sector wage last year here was €47,400 – 40pc higher than in the private sector.

Around half of this pay gap can be attributed to differences in education, experience and qualifications, the paper said.

But in the UK, average public sector pay is £26,200 (€30,200) – almost exactly that of the private sector. Davy said Ireland’s public/private pay gap is on a par with southern European countries such as Italy, Greece, Portugal and Spain.

“The public sector also enjoys retirement benefits that need to be taken into consideration,” the report states.

“On our calculations, a private sector worker would need to save a €590,000 pension to match the same €23,000 paid per annum to public sector workers when they retire on a career-average salary scheme. The figures are higher for those with defined benefit pensions linked to their final salary.”

Quoting figures supplied by the Central Statistics Office, Davy said there is a wide distribution of wage rates across the public sector.

Gardaí had the highest average pay last year at €64,700, followed by semi-state companies at €53,300 and education at €47,600.

The Defence Forces had the lowest average pay, at €42,200, but were still above the private sector average of €33,900.

“A key point here is that we are looking at what is actually paid to workers,” Davy noted.

“Pay scales in the public sector are often unrepresentative of actual earnings due to a myriad range of allowances, reliefs and other payments.”

The Davy report states that the Public Sector Pay Commission should, in determining a successor to the Lansdowne Road Agreement, ensure that growth in public pay per employee should match rises in the private sector. It should also make sure that the value of pensions are included in any comparison of public and private sector pay, and that any planned multi-year pay rises must be conditional on the performance of the economy.

Read More: Commission will have to grasp reality

A report by the ESRI in December stated that there was little clarity on the difference between public and private sector remuneration. The think-tank stated that we must “generate a reliable estimate of the public-private sector pay premium” in order for pay talks to be effective.

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