Public sector pay increases have outstripped private sector salary rises, despite the recession, according to research undertaken by think-tank, Policy Exchange.

Although public sector workers are subject to a two-year pay freeze, the study claims they have been sheltered from the effects of a recession in which many private sector workers have suffered drastic cuts in their standard of living. Pay has shrunk for the lowest paid 30% of private sector workers, and private sector pay is only higher for the top 10% earners, the report shows.