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Private sector pay to rise quicker than the public sector

Private sector pay will rise quicker than pay in the public sector, a report from the Institute for Fiscal Studies has said.

The report shows the level of pay in the public sector is now at broadly the same level as it was before the recession in relation to the level in the private sector. During the aftermath of the recession, public sector pay fell at a much faster rate than the public sector, but that gap has been closing since 2010. It is now seems that in the next four years private sector pay will continue to grow at a much quicker pace than public sector pay due to cost of living and inflation.

The private sector is usually composed of organisations that are privately owned and not part of the government. These usually include corporations, partnerships, and charities. The public sector is usually composed of organisations that are owned and operated by the government. This includes the police, teachers, civil servants and NHS workers.

The report talks of worried that the pay gap will have negatively effect the public sectors ability to attract and retain workers with particular qualities
Pensions also have a massive impact on the wage differences in the private and the public sector. The report said that a large majority of public sector workers were saving into more generous defined benefit, largely final-salary, pensions. This compared with 12% of private sector staff on pensions of this kind.

Jonathan Cribb, a Research Economist at IFS and an author of both reports, said,
“There is substantial variation in the estimated differential between public and private sector pay for different types of workers and across different parts of the country. This might suggest differentiating pay awards going forward. But the uncomfortable truth is that it is lower paid workers, women and those in poorer regions who do best in the public sector relative to the private sector.

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