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Earnings

Answer

The growth in the Public Sector Average Earnings Index (AEI) was 4.2 per cent. in the year to November 2005 (single month figure, for Great Britain, seasonally adjusted and excluding bonuses, Source: Office for National Statistics), compared to 3.7 per cent. in the Private Sector and 3.8 per cent. in the Whole Economy.In the short-term the public and private sector AEI growth can diverge and they usually do, but in the long-term they tend to be very similar. The average annual growth between March 1997 (the earliest available data) and November 2005 was 4.0 per cent. in the public sector and 4.2 per cent. in the private sector (and 4.1 per cent. in the whole economy).Government policy on public sector pay is devolved to individual Departments, while the Treasury maintains a monitoring and co-ordinating role. Government policy on public sector pay remains one of ensuring pay awards are justified, affordable and deliver value for money. Given that it accounts for around a quarter of all public spending, controlling pay is essential to delivering value for money and keeping inflationary pressures in check.With this in mind, the Chancellor of the Exchequer has written to the public sector Pay Review Bodies emphasising the importance of basing its pay settlements on the achievement of the inflation target of 2 per cent. Furthermore, to achieve a more co-ordinated approach to pay across the public sector, the Government have now established a new single gateway to scrutinise all significant public sector pay proposals (as announced in the last pre-Budget report). Reporting to myself, the objective of the gateway (Public Sector Pay Committee) is to establish a common set of objectives for pay across government, extending and strengthening existing arrangements. Its aim is to ensure that all new pay structures are evidence-based, represent value for money and are financially sustainable over the long run, including taking account of the pensions implications of new pay decisions.

Secondary information

Type

Written question

Reference

442 c1834W;442 c1834W; 51282

Session

2005-06

Subjects

Private sector Public sector Average earnings

Contains statistics

Yes

Link

View this Written question on www.publications.parliament.uk