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Conclusions Reached by Pay Study Questionable

August 7, 2008
For Immediate Use

Conclusions Reached by Pay Study Author Are Highly Questionable

A pay study that concludes public sector workers are paid substantially more than private sector workers contradicts market surveys carried out by public sector employers.

The study by Waikato University economist, Professor John Gibson, claims that the average pay differential between the public and private sectors is between 17 and 21%.

“That alleged gap flies in the face of the extensive market surveys carried out by employers in the public sector,” says Public Service Association National Secretary Richard Wagstaff.

“These market surveys are used as the starting point for pay negotiations by most public sector employers and form the basis for what public sector staff are paid,” says Richard Wagstaff.

For example look at the pay rates for scientists at our largest crown research institute, AgResearch. They work to lift the productivity of our pastoral farming sector, which produces more than 35% of New Zealand’s exports and is worth more than $10 billion a year.

In 2001, market surveys conducted by AgResearch, showed its science staff were paid an average of 20.4% below scientists with the same qualifications, knowledge and experience who work in non-science industries

“Last year the PSA negotiated pay increases of between three and seven per cent for the scientists at AgResearch,” says Richard Wagstaff.

“But after those pay rises the market survey shows AgResearch scientists are still paid 14.6% less than scientists with the same qualifications, knowledge and experience working in non-science industries.”

“The PSA and AgResearch are committed to closing this pay gap so that the institute can retain and recruit the skilled staff it needs to continue growing our $10 billion pastoral farming industry.”

Richard Wagstaff says the situation at AgResearch is mirrored across the public sector.

“The public service is struggling to retain and recruit social workers, mental health nurses, prison officers, lawyers, finance analysts, planners, IT project managers and human resource staff,” says Richard Wagstaff.

“Why? Because the work is demanding and the people with the skills, qualifications and experience to do these jobs can earn more in the private sector in New Zealand or by going overseas.”

Richard Wagstaff says Professor Gibson is wrong when he claims that public sector unions are pushing for big pay rises before the election.

“The fact is that most of the large collective agreements in health, education and the core public service have been settled so most public sector workers are not involved in pay talks before the election,” says Richard Wagstaff.

Official figures also show that pay rates have risen slightly more in the private sector than the public sector in recent times. Between March last year and March this year private sector pay rose 3.5% compared to 3.4% in the public sector.

“The reality is that pay rises for the private and public sector have been almost identical for the last 10 years,” says Richard Wagstaff. “So it’s very hard to see how the study can reach the conclusion that public sector workers are earning substantially more than those in the private sector.”


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