[mrfredward]

Public sector salaries are usually set through a very bureaucratic process, where the salary has everything to do with the position and little to do with subjective evaluations.

In the private sector, salaries have more to do with subjective criteria like "how much do I think this person is worth" or "will this person go looking for other jobs if I only pay x."

Envy is not as much of an issue when people in the same role all make the exact same amount. It is an issue when pay is set by the will of a manager/HR person whose perception of things differs wildly from the employee's perception (regardless of whose perception is more correct). That being said, paying people by perceived performance, for all its flaws, is still better than rigidly paying someone based on what the sign on their desk says, with no consideration of how well they actually do their job.