The evidence, by the Welsh Government’s Chief Economist, shows that the arguments put forward by the UK Government are flawed and are far from the full picture.
Finance Minister Jane Hutt said:
"The evidence we are publishing shows that the widespread opposition to regional public sector pay is very well founded. The Treasury’s submission is full of assertions made without any solid basis in the evidence.
"Contrary to what the Treasury states, there is no good case for thinking that the gap between public and private sector pay is larger in Wales than in other parts of the UK. We also can not see any evidence that "excessive" public sector pay has been "crowding out" private sector employment in Wales.
"In fact, since devolution and until the recent recession, Wales has been outperforming the UK in terms of its private sector jobs growth – this is completely at odds with the Treasury view.
"It is also clear that a number of important factors have simply been ignored in the Treasury’s analysis, and that once these are factored in, there is no clear evidence that a persistent pay differential exists across the public sector as a whole.
"In fact, if there is a public sector pay differential, it is found primarily amongst lower paid workers, and lower paid women in particular. I make no apology for the steps that we have taken in Wales to address poverty and to tackle the gender pay gap. It would be completely unfair to single out these groups of public sector workers for severe reductions or freezing of pay.
"Attempts by the UK Government to engineer reductions in public sector pay in Wales would be particularly harmful in present circumstances. Any reductions in pay will lead to lower levels of spending and hence are most likely to result in knock-on effects for the Welsh economy and a loss of jobs.
"A policy of regional or local market facing public sector pay would be economically damaging and socially divisive for Wales. Driving down pay in our most disadvantaged communities at a time of economic stress and exacerbating pay gaps between men and women, would be bad for Wales and harmful to the UK as a whole.
"I trust the UK Government will look at our evidence and not proceed further down this path."