Public sector breeds its own fat cats

Aug 29 2005 by Brian Amble Print This Article

Public sector organisations in Britain are increasingly offering six figure salaries to high-fliers in an attempt to compete with private sector companies and retain experienced staff.

The emergence of a new breed of "public sector fat cats" is exemplified by Royal Mail Chief Executive, Adam Crozier, who enjoys a package worth more £2 million, and Network Rail's John Armitt, who takes home more than £1 million.

According to research by Management Today magazine, there were no fewer than 18 jobs advertised on one public sector website at salaries of more than £100,000 a year.

Meanwhile the average CEO of a privately-owned UK company earns just over £500,000 a year, the magazine found, pushing the UK down to third place in the global pay league behind the USA and Germany.

UK pay pales being that of the USA, where a CEO can expect to earn an average of £1.5 million.

"New Labour started off with a mission in 1997 to improve public services. This has led to an increased crossover of business talent from the private sector and increased upward pressure on senior pay," said Management Today's editor, Editor Matthew Gwyther.

The magazine's pay report also found that hourly pay for front line public sector staff has also exceeded that of the private sector, with rates of £12.50 compared with £11.94.

But as it also pointed out, higher pay seems to be doing nothing to reduce levels of absenteeism in the public sector.

Recent figures have found that average absence levels in the public sector stood at 10.3 days per employee per year in 2004, compared to 6.8 days in the private sector.

The cost of this to the UK economy was £4.1bn in 2004 Ėthe equivalent of an extra 1p on income tax.