Wednesday, December 28, 2011

28/12/2011: ECB: New evidence on public-private pay gap: part 2

As an addendum to the previous post on public-private pay gap study, here are the core results for differences in the pay gap based on various income percentiles:

In the table above, levels of income are referenced to percentiles, so wage differentials are estimated for public-private sector gap per each income percentile. In general, for most countries other than Spain, Ireland and Portugal, "the public sector gap is higher at the lower quantiles and declines along the wage distribution. This is further evidence that the dispersion of the wages in the public sector is much smaller than in the private sector. In this context, public sector employees with low wages earn a higher wage premium relative to higher income employees [again, ex- Spain, Ireland and Portugal]."

In the case of Ireland, the premium lowest for top-earners, second lowest for bottom-earners. The premium rises slightly for 25th percentile and 75th percentile and peaks at 50th percentile. So Irish public sector premium is highest for mid-range earners, lowest for top-range earners, and second lowest for low earners.

1 comment:

Mark D said...

Well said Constantin.
Unfortunately, human nature being what it is, no one likes to think they are overpaid. And so many of our government employees have never worked in the private sector and depend only on self serving trade union propaganda for their perspectives.

The worst part of this 30%-50% structural premium (taking super gold plated pension benefits into account) is that it allows the ECB to hold Ireland hostage we need their money for current government spending which is given ONLY on condition that we continue to bail out our BANKRUPT private financial institutions to protect German and French private financial institutions they owe money to.

We need to declare a national emergency, cut government spending by 30% IMMEDIATELY and tell the ECB where to go. This may seem radical but as Herbert Stein said "If something cannot go on forever, it will stop." so this will happen in the end. Sadly I see so many entrenched vested interests that this may yet entail much grief.