Slí Eile: The controversy around public-private sector pay differences continues following today's release by the Central Statistics Office of a special multi-variate analysis of pay differences based on the 2007 National Employment Survey. The full Report can be downloaded here.
The conclusion is that public sector workers are better paid than private sector workers even when statistical controls are applied in relation to age, education, experience, gender etc. However, the difference does not seem nearly as large as that shown in the recent analysis by the ESRI. The CSO are careful to point out that even when statistical controls are applied certain differences remain which are hard to account for. In other words you could have two persons employed one in the public sector and one in the private with same level of education, union membership, experience etc and yet one is better paid than the other because the context is very different. This may have something to do with the way in which pay is set at central level or with the nature of jobs in each sector. It could also indicate a degree of labour market segmentation. Another feature of both studies - ESRI and CSO - is that non-regular bonuses of employees are not included in the underlying data. This can be an important feature of some private sector occupations including finance and banking (where evidently such bonuses have been sharply cut back in recent times). Previous blogs have addressed some of the issues. See here and here. There has been, already, adverse Union reaction to the latest findings.
While it is necessary to oppose proposals to cut pay in either the public or private sectors because of their deflationary impact and the unfairness of imposing cuts in pay on average to below average workers it is not helpful to dismiss robust statistical work - limited as it is by the available data. What should be countered is the way in which some commentators jump on these findings to support their argument for levelling down of wage income to lower levels. Silence prevails on other types of income. Getting back to competitiveness becomes a matter of getting back to normal profit levels (and super-normal in the case of many sheltered sectors and quasi oligopolies).