Public sector workers earning 40% more than private, says Davy

When it comes to pensions, a private sector worker would need to save €590,000 to keep up with public sector benefits...

Public sector workers in Ireland are earning 40% more on average than their private sector counterparts, new research from Davy stockbrokers has found.

The Davy report found that the average public sector wage is €47,400, compared to €33,900 in the private sector.

Its 'Public Sector Pay – Avoiding the Mistakes of the Past' report also calculated that private sector employees would have to save €590,000 to buy annuity on retirement to match the career-average of their public sector counterparts.

The report states:

"The public sector also enjoys retirement benefits that need to be taken into consideration.

"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."

Davy said that up to half of the pay gap can be attributed to differences in education, experience, qualifications and other factors.

It also showed that wage rates varied greatly across the public sector itself.

Gardaí had the highest average pay in 2016 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.

Davy was using figures supplied by the Central Statistics Office (CSO).

In contrast to the Irish public/private gap it found, pay is almost on a par in both sectors in the UK. The study states that Ireland's gap is high by European standards, comparable to the likes of Italy, Greece, Portugal and Spain.

The report's author, Davy economist Conall Mac Coille, wrote:

"Ideally, the pay gap should close over time.

"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."

Business concerns

This conclusion chimes with business group Ibec's calls in January for any public sector pay rises to be in step with the wider economy.

Ibec director of employer relations Maeve McElwee said at the time:

"It is in everyone's interest to have a coordinated approach to public sector pay determination and the competing demands for resources. The economy has improved faster than envisaged, but new uncertainties have emerged; not least the risks that Brexit presents. Any review of pay must also reflect the full value of pension entitlements in the public sector, which far outstrip those typically available in the private sector, along with the great level of job security.

"Government must address the underlying issues driving pay demands, such as housing and childcare costs, rather than using the blunt and expensive instrument of accelerated compensation to off set very specific cost of living expenses. At a headline level, there is currently no inflation in the economy. Targeting specific cost of living factors at source is the best way to protect competitiveness."

Earlier this month, the CSO revealed that the public/private sector pay gap had narrowed in the three years to 2014.

On average, it stated that public sector workers earned 9% more than equivalent private sector employees in 2011. This had closed to a 5% differential by 2014, the latest year for which data was available.