Fintan O’Toole highlights the data provided by the OECD Government at a Glance 2011 report in looking at comparisons in public sector pay rates across countries. As he emphasises, these data adjust for differences in purchasing power across countries. This is relevant if the goal is to establish the relative living standards of workers in different countries, which in turn is relevant in the recruitment of internationally-mobile workers.
However, it is also relevant to compare pay levels between public and private sectors within a country (adjusting for occupational and skill characteristics etc), since public and private sector workers face a common domestic cost of living and, over some time horizon, the relevant choice for many individuals is whether to work in the public sector or private sector. This is why rigorous analysis of comparative pay trends across public and private sectors is important in determining whether public sector pay levels are at an appropriate level. An up-to-date study along these lines would be helpful.
Finally, Fintan O’Toole postulates that the cuts in public sector pay since 2008 mean that PPP-adjusted pay levels for public sector workers have likely declined in Ireland relative to other countries since then. While nominal pay reductions have been substantial, it is also the case that the price level in Ireland has declined relative to many other countries since 2008 so that the decline in PPP-adjusted pay levels is much smaller. For example, the ratio of the Irish price level relative to the average price level for the euro area was 1.17 in 2008 and 1.07 in 2010.