Wales politics

Wales' public-private sector pay gap 'biggest in UK'

Treasury entrance
Image caption The Chancellor announced a review into regional pay in the autumn

Women in Wales can earn an extra 18.5% and men an extra 18% in the public sector than they could expect to make working for private companies, according to a think tank.

The Institute for Fiscal Studies (IFS) estimates the public-private wage gap in Wales is the highest in the UK.

MPs will debate proposals to introduce regional public sector pay on Tuesday.

The UK government says it wants to create a more balanced economy, but critics say Wales would lose out.

New figures from the IFS, reported for the first time by BBC Wales, show how much more workers can expect to earn in the public sector in Wales.

The think tank estimates that similarly qualified women - those of the same age with the same level of education and qualifications - earn 18.5% more than those in the private sector. The UK average for women is 10.2%.

The figure for men was 18%, compared to 4.6% across the rest of the UK.

Plaid Cymru MP Jonathan Edwards said it showed how much Wales could lose if public sector wages were cut.

"We are talking about huge amounts of money leaving the pockets of ordinary working people," said Mr Edwards, who has tabled a Westminster Hall debate on regional pay.

Martin Mansfield, general secretary of the Wales TUC union, said it was the "wrong idea at the wrong time".

He added: "The whole purpose of regionalising pay is to decrease pay in the public sector.

"That would have a massive impact, particularly in high-unemployment, low-wage areas like the north east of England and particularly Wales."

Mr Mansfield said the "biggest difference for Wales is our employment mix isn't as good as it should be.

"We don't have as many of the high-skilled, high-paid jobs in the private sector. We don't have enough jobs in general in the private sector."

In last year's autumn statement, chancellor George Osborne said independent pay review bodies would report in the summer on whether the public sector can be "made more responsive to local labour markets".

He said the move was "a significant step towards creating a more balanced economy in the regions of our country that does not squeeze out the private sector".

Ministers say the idea is not new and had been proposed by the previous Labour government.

'Higher salaries'

Liberal Democrat MP Roger Williams said service sector employers in his Brecon and Radnorshire constituency have told him they cannot compete with salaries offered by the local council.

"Reducing wage rates will just reduce the demand in the economy and I don't think that's particularly good at the moment," he added

Solicitor Victoria Cannon said she had encountered difficulties when trying to recruit a legal assistant for her firm's Brecon office.

Image caption Victoria Cannon said her solicitor's firm could not afford to match public sector salaries

"We find that the public sector are able to offer higher salaries, whereas in the private sector we are not able to do this," she said.

"Additionally of course in the public sector you have benefits such as pensions and flexible working. We are not able to offer that as a small firm."

Lib Dems and Conservatives in Wales have expressed caution about the prospect of their parties' coalition government in Westminster ending UK-wide pay settlements.

The Conservatives' assembly leader Andrew RT Davies welcomed the review, but warned about creating "disparity in parts of the United Kingdom".

"We need to make sure that we are feeding in on an informed way so that Wales isn't penalised," he said.

Lib Dem AM Peter Black said the proposal had "set alarm bells ringing", adding: "Regional is not the way to go."

First Minister Carwyn Jones has called regional pay a "code for cutting pay" and said the Welsh government might look at taking responsibility for pay and conditions.

More on this story

Related Internet links

The BBC is not responsible for the content of external Internet sites