Wages growing faster in public sector

Wages growing faster in public sector

In the last twenty years, the increase in civil servants’ salaries was 5% higher than in the private sector, a study from IRES, Institute of Social and Economic Research (UCLouvain) reveals, mentioned by L’Écho on Thursday. From 1995 to 2015, wages increased more in the public sector (including teachers) than in the private sector.

Despite a strong interrelationship between public and private sectors, the latter has gradually lost ground. In the first quarter of 1995, the gap between the public and private sectors in terms of average hourly wage was 0.22% to the disadvantage of the private. In 2015, this gap increased to 5.5%. The drop took place in two phases: first between 1995 and 1998 (-3%) in the wake of the overall plan, then after the 2008-2009 recession (-2%).

Three explanations are being put forward by IRES: the decline of the manufacturing industry in favor of services, where bargaining power is traditionally lower; structural wage moderation; and the 2008 crisis which has not yet been digested.

The IRES study shows that the effects of the 2008-2009 recession are still being felt today in the private sector. True, wages have resumed their progress since then, but there is still a level effect compared to the baseline trajectory. “This is why we will never completely recover what was lost in 2008-2009,” said Henri Sneessens, economics professor in Luxembourg, IRES associate researcher and co-author of the study.

The Brussels Times

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