Tom Hayes (Tipperary South, Fine Gael)
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Question 66: To ask the Minister for Finance if research has been conducted into the gap between public sector and private sector pay; and if he will make a statement on the matter. [7959/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I assume that the Deputy is referring to the ESRI commentary published about a month ago dealing with public sector and private sector pay. The commentary drew on research carried out in 2004 which compared public and private wage rates, controlling for other factors that impact on wages, such as age, education and gender. The study concluded that in 2001, public sector employees earned 13% more than private sector employees — again, controlling for other characteristics associated with wages.

The study seems to be based on aggregate data on fairly broadly defined categories, for example, professional, operative. However, it does not make comparisons based on actual job responsibilities and weights. Thus, it does not show conclusively that, on a like for like basis, public servants are paid more than valid comparators in the private sector. The methodology adopted simply does not allow such a conclusion to be drawn. This is not to criticise the research; it is merely to highlight that one must not draw inferences which the study could not sustain.

The ESRI commentary also mentions a survey carried out among those who had recently graduated from third level colleges in 2004 which found that wages for this group were 20% higher in the public sector but acknowledges that the group was a narrow one. Again, we are dealing with a broad comparison.

The Government position on public service pay is very clear. The public service must be able to attract and retain a reasonable proportion of good quality staff at all levels. In this respect, it should neither lead the field, nor trail behind. The independent benchmarking process affords a means whereby painstaking comparisons between public service jobs and their counterparts in the private sector can be made and appropriate pay rates for the public service determined. This process looks at qualifications, responsibilities, hours worked and a range of other factors. On the last occasion, the benchmarking process recommended awards across and within areas of the public service of from 4% to 25%, showing clearly that the benchmarking body looked at individual jobs and related them to their comparators in the market.

A new benchmarking body has been established recently and is to report in the second half of 2007. I expect that, among the many tasks undertaken by the body, will be consideration of the significance of studies such as those quoted by the ESRI.

The ESRI commentary represents a useful contribution to the debate on public service pay. It should be understood, however, within its own terms.