Understanding What Has Been Happening to the Public-Sector Pay Premium in Great Britain: A Distributional Approach Based on the Labour Force Survey

Abstract

This article investigates what has been happening to the public‐sector wage differential in Great Britain over the period 1994–2017. The evidence indicates that apart from men in the lower part of the pay distribution, the public‐sector pay premium has declined for all public‐sector workers. This decline has coincided with a decline in the overall pay gap, which is associated with changes in the composition of public‐ and private‐sector workforces. As the relative pay disadvantage experienced by public‐sector workers at the top of the pay distribution has worsened over time this must raise serious concerns about the ability of the public sector to recruit and retain the staff it needs to deliver public services.