The problem is how to measure any public sector pay gap. Because public sector jobs often have different characteristics from those in the private sector (there are relatively more graduate jobs in the public sector for example) a simple comparison of average pay between the public and private sector can be misleading. The difficulty is what to net out when doing comparisons. Education ? Almost certainly because of different entry requirements. Age? Almost certainly because longer work experience tends to be reflected in higher pay and any differences in experience between the public and private sectors needs to be netted out in making comparisons. What about job characteristics? Here economists are divided. Some argue that people choose jobs on the basis of its features (eg unionised work) and this choice partly depends on wages and not the other way round. Others argue that there is a going rate for a particular kind of job and so job characteristics should be controlled for. In the end what matters is whether this makes any difference to the conclusions regarding the public sector pay gap. And the answer is yes it does.
The solid blue line in the graph below shows estimates of the average (mean) public sector hourly pay gap over time measured 3 ways a) the raw percentage difference between public and private without netting out anything b) the gap net of experience, education and gender c) the gap net of experience education, gender and a control for whether the job is manual or not
The Public Sector Pay Gap Measured 3 Ways
Whichever way pay is measured there is a common pattern. Public sector pay has been falling since 2011 and is now - in relative terms - the lowest it has been compared to wages in the private sector for 25 years. If we believe the 2nd panel there was still an average public sector premium of around 3% in 2016 (the latest full run of data we have). If we believe panel 3, average public sector pay is now lower than that in the private sector and has been since 2015.
Another feature of the public sector pay debate is that the pay gap varies across different areas of the UK.
Public Sector Pay Gap Across the UK