Author: Professors Blackaby and Murphy and Dr O'Leary and Dr Staneva
In 2011 the Chancellor of the Exchequer announced that the public sector pay freeze would come to an end in 2012/13 and emphasis would be placed on making public sector pay more responsive to local labour market conditions. He quoted evidence from the Institute for Fiscal Studies (IFS) which showed a public/private sector pay premium of around 8 per cent with substantial differences in the regional pay premium.
Economists at Swansea looked at the robustness of the IFS research and found the results were very sensitive to a number of factors. The Welsh Government quoted this research in its evidence to the Pay Review Bodies, which the Chancellor had asked to consider the evidence for market-facing pay. The Chief Economist at the Office of Manpower Economics stated (2012), “The research by economists at Swansea University played a valuable role in helping Review Boards assess the evidence on the issue.” The Deputy Director, Public Policy Analysis Division at the ONS stated the work of Swansea economists changed the way we modelled public sector pay, “which improved our analysis and offered new insights”. In 2012 the Chancellor announced he would not be pursuing market-facing pay in the public sector.
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Read the whole Influencing Policy in the Areas of Employment and Public Sector Pay case study.