Think–tank backs local pay deals

SCRAPPING national pay bargaining in the public sector would save more than £6 billion a year that should be used to create hundreds of thousands of jobs, an influential think-tank has urged.

Nationally-set pay bands mean the average public sector worker is paid 7 per cent more than private sector counterparts – rising to almost 14 per cent when pensions are taken into account – according to a report published yesterday by the right-of-centre Policy Exchange.

That public sector “premium” is as high as 25 per cent in some parts of the country, it said.

The think-tank called for public sector pay levels to be brought into line with their local private sector equivalents – saving £6.3bn that could be spent tackling local unemployment and creating 288,000 jobs.