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 think-tank Policy Exchange said the gap between public and private sector pay is 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 receives over a private sector worker - is now up to 35% calculated on hourly pay.
The study claims 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% 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.
"This is an issue of fairness. It is unreasonable and unfair to expect private sector workers to make all the sacrifices. We need a much better-balanced system of public pay, with organisations like the NHS and schools given greater freedom to vary pay so they can attract staff but also get value for the taxpayer."
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%. 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."