20 JUNE 2018

Over the last 25 years, public sector incomes have grown much faster than the private sector, while public sector employees also enjoy a higher rate of sick leave costing taxpayers $173 million, according to Public Sector Wage Gap: The taxpayer-funded premium for working for the government, a new report released today by the New Zealand Taxpayers’ Union.

“If you work for the Government, you earn a third more on average, with taxpayers footing the bill,” says Taxpayers Union Executive Director Jordan Williams.

“This report seriously undermines the public sector unions’ claim for 9-15 percent pay hikes for their members. It blows to bits claims the last Government did not pay bureaucrats enough.”

“The public sector pay gap nearly doubled since the 1990s. If anything, a wage freeze, not hikes, would be fairer.”

“Left wing activists and unions would have the public believe that the public sector has undergone nine years of neoliberal hell. But this shows that to be a lie.”

Key findings of the report:

• The gap in weekly earnings between the public and private sectors has grown since 1990, from 18.9% of private sector earnings to 34.6% in 2017. The gap peaked in 2010 at 38.4%. The premium is even higher for hourly earnings (as public sector employees, on average, work fewer hours).

• If the Government had retained a public sector earnings premium of 20%, taxpayers would save $2.5 billion per year, or $1,445 per household in lower taxes or reduced Government debt.

• The public sector took an average of 8.6 and 8.4 days of sick leave in 2016 and 2017, compared to the private sector average of 4.7 days per year.

• If the public sector reduced its rates of sick leave to private sector levels, the taxpayers would save $173 million per year, or approximately $100 per household per year in lower taxes, or reduced Government debt.

Key recommendations:

• The Government should set a goal of returning to a 20% public sector earnings premium by placing constraints on public sector wage growth and focusing on growing productivity.

• If private sectors stagnate or decline (such as in a recession) the Government should be willing to cut public sector wages to match.

ENDS

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