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Moving From The Public To The Private Sector

As the recession looks to be even deeper than first thought, many people are considering their long-term employment prospect. On the face of it, work in the private sector seems more secure and to offer greater financial rewards. However, if you’re considering making the move from public to private, it is important that you understand the differences between each – especially where your rights are concerned.

The private sector is generally made up of organisations that tend not to be government owned. Corporations, charities, retailers, local businesses and partnerships usually fall into this bracket. Public sector jobs are those owned and operated by the government, such as educational establishments, the police, healthcare professionals, prison services and governmental bodies, such as councils.

Public vs. Private

The popular myth is that private sector work pays more than its public counterpart. However, according to a report by the Department for Trade and Industry: “Public sector workers are paid more than private sector workers whether measured annually, by typical wage or by raw average. For all these measures, the gap between public and private sectors increased between 2009 and 2010.”

The simple factor here is the ability of a body to access funds. Where private sector companies have to rely on fund-raising or the benevolence of investors, the Government is the single biggest employer in the UK and has access to an annual budget from which to pay wages. While this budget is not a bottomless pit, wages can be frozen or cut in times of economic downturn, where private sector organisations more readily have to consider redundancy.


However, employment is about more than just money. There are your rights as a worker to take into consideration. The main difference between private and public sector employment boils down to pension schemes. As a public employee, the government deducts a portion of your wage and invests it on your behalf, guaranteeing you a minimum level of pension on your retirement. With the recession biting hard, public employees are being asked to retire later, so there is enough money to cover the expenses generated by an aging population.

As a private sector worker, you will be part of a pension scheme, which is essentially the same as the one run by the government, but on a smaller scale. Workers contribute towards their pensions by giving up some of their salary as provision for the future. What separates the two is that private pension schemes are often based on the employee’s final salary. The higher the salary you achieve, the higher your pension is likely to be.

While some might argue that this provides a huge incentive to work hard, it can also leave those ‘ground-level’ workers with far less than they hoped for. In addition, without having made any National Insurance contributions, workers in this position may find themselves having to remain in employment beyond the age of retirement.

The Government is currently looking at the laws governing the private sector and employees’ rights. While it may not be of immediate benefit to those in this sector, it could have positive ramifications for future generations.

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