Workers in the public sector have enjoyed bigger pay rises than those in private firms despite the government’s attempt to restrain pay, a new report has claimed.

A study by Policy Exchange said the the gap between public and private sector pay was still rising, with many workers in companies seeing “drastic cuts” in their standard of living.

The report said the public sector “premium” - the additional pay a typical public sector worker received over a private sector worker - was now up to 35 per cent calculated on hourly pay.

The study claimed that 2009 was the first year in which average pay for public sector workers was on average higher than for all private sector workers.

The pay gap continued to increase up to December 2010 in spite of pay freezes, the report said.

In Scotland, the North East, the North West and Wales, a typical public worker can expect to be paid a fifth more than the typical private sector worker, said the report, adding that the only group where private sector pay was higher than the public sector was for the top 10 per cent of earners.

Policy Exchange director Neil O’Brien said: “Public sector pay has got hugely out of control. There is pressure on budgets like never before because of the deficit. If the unions want to preserve their members’ jobs they have to realise that pay is an issue which will have to be looked at.”

TUC general secretary Brendan Barber commented: “This is just another attempt by a right-wing think tank to stir up divisions between workers in the private and public sectors.

“The truth is that both are having a terrible time. Public sector workers are facing a pay freeze, job losses and have already seen the value of their pensions cut by 25 per cent.

“In the private sector pay freezes are still common, and public spending cuts are doing just as much damage as they are in the public sector.”

Unison leader Dave Prentis said: “This is a crude attempt to drive a wedge between the nation’s workforce and provoke a race to the bottom on pay and conditions. The data used is out of date and does not reflect the true picture and it does not compare like with like. It should be taken with a huge barrel of salt.

“This year the banking and finance sector, the utilities, car manufacturing, the retail sector have all had pay increases and city bonuses have made a spectacular comeback. There are many more professionals in the public sector, such as doctors, nurses, social workers, judges, admirals, police chiefs and the lowest paid jobs have been contracted out to the private sector, thus skewing the figures. “

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