I Introduction
  • 1 0000000404811396https://isni.org/isni/0000000404811396International Monetary Fund

Abstract

How many people are employed by the government? How many are employed by the central government compared with state and local authorities? How many are employed in public enterprises? How much are they all paid? How much are they paid relative to each other, or relative to the private sector? Such questions interest people in general and economists and policymakers in particular; yet it is remarkable how little information is readily accessible on these topics.

How many people are employed by the government? How many are employed by the central government compared with state and local authorities? How many are employed in public enterprises? How much are they all paid? How much are they paid relative to each other, or relative to the private sector? Such questions interest people in general and economists and policymakers in particular; yet it is remarkable how little information is readily accessible on these topics.

These topics are interesting at the general level but are important in more specialized ways as well. Only too often are assertions made that government wages in a country are too high or too low or that total government employment is excessive. The statistics necessary to provide a cross-country comparative basis for such assertions simply have not been available. Similarly, in evaluating the size of the public sector, one often focuses on the number of government employees in a particular functional sector (e.g., health, education) on a per capita basis, again without any clear standard of whether the statistics for a given country are reasonable or not. While the experience of other countries is only an additional datum for such an analysis, it is an important one. Similarly, the numbers employed in the public sector and their conditions of employment can influence the entire pattern of employer/employee relationships within the economy, including pay scales, tenure, indexation, and pensions. The size of public sector employment and the amount paid in wages and salaries is thus potentially a lever on employment, skill differentials, staffing levels in the private sector, and, hence, on overall macroeconomic stabilization policy. For instance, if the government grants substantial wage increases to low-paid government employees, this may affect the wage policy for the country as a whole. The way in which such wages and salaries are financed may in turn affect all prices and eventually the balance of payments.

This paper represents a beginning in the effort to assemble the statistics for an international comparison of public sector employment and pay; it seeks to stimulate discussion by highlighting some of the apparent anomalies and differences between existing and predicted patterns or norms. It focuses on several broad topics: (1) the size of central, state and local, and nonfinancial public enterprise employment both on a per capita basis and as a share of total nonagricultural employment; (2) the magnitude of government wages and salaries at each level of government and their relative importance in gross domestic product (GDP), national income, and total wages in the economy; (3) the relative levels of public and private sector salaries; (4) the structure and size of public employment by functional sector; (5) the degree of inequality observed in the salary structure of governments; (6) the pattern of wages across the different occupations commonly found in the government sector; and (7) whether there are any common factors (e.g., per capita income, size of population, type of economic system) that may explain the size of public sector employment, total government wage and salary expenditure, or the level of government wage rates. Finally, the paper provides intercountry indices that may be used in analyzing government wage rates and the level and structure of government employment. Throughout, the paper examines each of these topics in terms of the patterns observed in the developed and developing world and in different regions.

Many methodological questions were encountered before the analysis of data could begin, and these are dealt with in the next section. Sections III—VII use summary measures of the data to discuss some of the questions raised at the start of this paper; some provocative predictions are made in Section VIII. Statistics on individual countries are provided in Appendix I, Tables 19-33.

Cited By

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