THE PAY premium enjoyed by public sector workers should - as a matter of urgency - be put on the agenda for discussion between the Government and the social partners in light of the recession, Economic and Social Research Institute (ESRI) researchers say in the organisation's new quarterly report.

Conservative estimates suggest that the pay of senior public servants was more than 10 per cent ahead of their private sector counterparts in 2006, while public servants on the lowest grades earned a premium in excess of 30 per cent.

According to researchers Elish Kelly, Séamus McGuinness and Philip O'Connell, the extent of the gap between public and private sector pay in Ireland is "far higher" than in many other countries. The average wage advantage increased to 20 per cent in 2006 from less than 10 per cent in 2003 thanks to several rounds of pay awards, while the pay gap in the rest of Europe rarely exceeds 10 per cent. "This differential would be difficult to justify in normal economic circumstances," they say.

The researchers cite additional awards recommended by the Review Body on Higher Remuneration in the Public Sector in 2007, noting that some of the awards were deferred. They cite the second benchmarking report, which recommended awards of up to 15 per cent mainly for senior grades while there was no increase for the majority of grades.

The research was published in a subsection of the ESRI's main quarterly economic commentary, in which the organisation argues that the possibility of public sector pay cuts should be considered given the deterioration in public finances. The main report says this may well be preferable to cuts in services and could well yield expenditure savings more rapidly than job cuts through natural wastage, early retirements and redundancy schemes.

The specific research on the pay gap says the differential is such that any wage reductions in the public sector would, in general, be highly unlikely to lead to any significant challenges in terms of retaining or recruiting staff.

The researchers say their work takes no account of the fact that the majority of public sector workers are entitled to pensions index-linked to wage growth in the public sector.

"Furthermore, occupational pension coverage is much lower in the private sector, and many such pension schemes are not linked to wage growth.