PAYING government workers the same as local private sector employees could save £6.3bn and create more than a quarter of a million new jobs, a Westminster think-tank claims this morning.
Public sector workers are often paid considerably more than in equivalent private sector jobs in their area, Policy Exchange says.
The report argues that wages should not be calculated by a system of national pay bargaining, by which pay is increased on a UK-wide basis, resulting in relatively high wages in parts of the country with lower average remuneration.
“In some parts of the country, some public sector workers are seeing premiums over their private sector counterparts that are as high as 25 per cent,” it says.
The report suggests “enabling local public sector employers to choose systems of pay that reflect local living conditions and vary pay awards by the performance of employees.”
Over £685m is redistributed to the north east through state sector overpayment, Policy Exchange has calculated, while the system sees London and the south east lose nearly £3.2bn through salary underpayment.
Yet the trades union Unite hit back. “National bargaining is absolutely essential for stability in public services,” a spokesperson told City A.M. “Ending it would cause a race to bottom for hard working public servants.”