Sunday Times reports Chancellor made comments during Cabinet row over austerity.
GMB, the union for public sector workers, has taken Chancellor Philip Hammond to task over reports he described public sector workers as "overpaid" .
The Sunday Times reports five sources confirmed Hammond, used the words during a row over austerity at Cabinet last week, before being reprimanded by other ministers.
The Government’s current policy is to impose a 1% cap on public sector pay until 2020, continuing the wage freezes and caps that have been in place since 2010.
GMB analysis shows the average full-time public sector worker has lost on £8,953 in real terms between since 2010, and they face a further £4,073 in cuts by 2020 - over £13,000 in total .
Public opinion polling for GMB by Survation shows two thirds believe cuts to public services have gone to far, and 75% believe public sector workers deserve a pay rise this year .
GMB is leading the campaign to End the Public Sector Pay Pinch .
Rehana Azam, GMB National Secretary, said:
"Philip Hammond has displayed arrogant contempt for public sector workers with his foolish and insulting comments.
"He is too removed from the reality of daily life to see the impact of seven years of pay pinching on ambulance workers, nurses and teaching assistants.
"He should try and live on a public sector worker's wage for a week to understand the struggle to make ends meet so many are facing as the cost of living rises.
"The truth is that the multi-millionaire Chancellor is out of touch with public opinion. Two thirds believe cuts to public services have gone too far and three quarters want to see a pay rise for public sector workers this year.
"It's time to end the public sector pay pinch."
GMB Press Office on 07958 156846 or at firstname.lastname@example.org
NOTES TO EDITORS
 Philip Hammond says public sector is ‘overpaid’
 Survation poll commissioned by GMB, 8 March 2017: http://survation.com/two-thirds-say-cuts-public-services-gone-far-survation-gmb/ - tables http://survation.com/wp-content/uploads/2017/03/GMB-Tables-Q1-8.pdf