VI The Structure of Government Wages by Level of Government and by Occupational Groupings
Author: Mr. Alan A. Tait1 and Mr. Peter S. Heller
  • 1 0000000404811396https://isni.org/isni/0000000404811396International Monetary Fund
Language:
English
Keywords:
OP; employee; government; wage; country; central government employment; government employee; local government wage; salary status; government work force; animal health officer; Wage structure; Public sector wages; Wages; Civil service; Asia and Pacific; Africa; government salary structure
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Abstract

The structure of wages within the government civil service has broad implications for many important policy issues. The spread of wages between the bottom-paid and top-paid civil servants is one kind of incentive for productivity and advancement within the government.29 In a country with a significant share of government employment in the modern labor force, the equity of the government’s salary structure may also influence the degree of equality of the overall income distribution. The wage rates set for particular occupational categories will influence the likelihood of government service being attractive or unattractive relative to private sector alternatives. This section presents data that offer insights on the relative pay of government employees across occupations and levels of government as well as on the degree of equality in a country’s civil service salary structure.

The structure of wages within the government civil service has broad implications for many important policy issues. The spread of wages between the bottom-paid and top-paid civil servants is one kind of incentive for productivity and advancement within the government.29 In a country with a significant share of government employment in the modern labor force, the equity of the government’s salary structure may also influence the degree of equality of the overall income distribution. The wage rates set for particular occupational categories will influence the likelihood of government service being attractive or unattractive relative to private sector alternatives. This section presents data that offer insights on the relative pay of government employees across occupations and levels of government as well as on the degree of equality in a country’s civil service salary structure.

Wage Levels Across Elements of the Public Sector

There are only limited data on the average salary per employee in different units of the government, and these are limited primarily to the federal countries of the OECD and a small number of the developing countries. (See Table 10 and Appendix I, Table 27.) Two observations stand out. The average central government employee is almost uniformly better paid than the average state or local government employee. However, this fact may simply reflect differences in the sectoral or occupational structure of employment at the different levels of government rather than absolute levels of pay. Second, although the average salary per employee in the nonfinancial public enterprise sector is generally higher than that paid in the central government, the data suggest some notable exceptions to this rule (for example, Benin, Canada, India, Italy, and Korea).

Table 10.

Intergovernmental Wage Differentials: Means and Standard Deviations1

article image
Source: Table 27).

X = mean; s = standard deviation; n = number of observations in the sample.

Salary-Scale Index for Specific Jobs

Another measure of the wage and salary structure was calculated using the starting salary of different types of employees commonly found in the government sector. These jobs included primary school and secondary school teachers, certified nurse, doctor, police sergeant, police corporal, police constable, engineer, mechanic, road inspector, agricultural officer, agricultural assistant, animal health officer, animal health assistant, meat inspector, and clerical officer. To give some sense of relative salaries, all salaries were compared with that of a clerical officer (whose starting salary took on an index value of 100). (See Appendix I, Table 29.) The variance in these indices across positions for a particular country was calculated as a measure of the wage spread. The mean value of the index for any given job across countries was estimated to give some sense of a norm salary structure. Both summary measures are presented in Table 11.

Table 11.

Measures of the Structure of Salaries by Occupation

article image
Source: Table 29.

Several observations can be made. First, while it would be unreasonable to assume that every country adopts the same differential between positions, the scale of many of the differences is striking. For example, a starting primary school teacher in Cyprus appears to make 48 percent of a clerical officer’s salary, while in New Zealand, 414 percent; for a secondary school teacher the range is from 56 percent in Cyprus to 461 percent in New Zealand. This contrasts with a mean for the 24 countries in the sample of 154 for primary school teachers and 208 for secondary school teachers. (See Table 11.) It is also interesting that most OECD countries pay their teachers below the mean, whereas many of the developing countries pay above.

Second, for some of the more specialized positions, such as doctors and engineers, the cross-country variance is even wider. For example, in Sweden, a doctor makes 154 percent of the salary of a clerical officer but in Bahrain, only 115 percent. In some Caribbean countries (e.g., Trinidad and Tobago) a doctor appears to be paid 10 times that of a clerical officer, in St. Lucia, 4.5 times. In some of the developed countries, one finds equally large differentials: in the United States the ratio is 3.7, in New Zealand, 6.3. Similarly, for a position such as an engineer, there is considerable variation, ranging from 1.5 times in Singapore to more than 6 times in Trinidad and Tobago, and to 4.8 times in India, New Zealand, and St. Lucia.

It is also interesting to note the wide variation in the relative salaries of positions in the same sector, for example, between primary school and secondary school teachers. In some countries, such as El Salvador, Guatemala, Cyprus, Denmark, and Sweden, the differential is small—zero to 12 percent. Yet, in other countries such as India or the United Kingdom, the differential is closer to 50 or 60 percent; in some countries, such as Kenya, a secondary school teacher appears to be paid a salary almost three times as large as a primary school teacher. Similarly, if one contrasts the salary of a certified nurse with that of a doctor, one can find that the ratios differ by as low as 15 percent in Bahrain to as high as 50 to 70 percent in Sweden or Cyprus or one that is three to six times as large, as in Trinidad and Tobago or Kenya. Countries that have the highest relative payment to doctors (Trinidad and Tobago and New Zealand) also have the highest payment to nurses, and it usually follows that those countries with lower payments to doctors also have lower payments to nurses.

In looking at the police force, it is not obvious why the starting salary of a police officer on the beat in the District of Columbia in the United States or in Trinidad and Tobago should be double the salary of a clerical officer. At the same time, in some countries, the police force is paid salaries equivalent to or close to that of a clerical officer, for example, in Belgium, Cyprus, Guatemala, and Singapore.

As might be expected, countries with major dependence upon agriculture tend to reward their agricultural officers more generously than others; the country with the highest multiple, Kenya, pays its agriculture officers 5.3 times more than its clerical officers, while New Zealand pays 4.9 times more. On the other hand, countries such as El Salvador, the Bahamas, Cyprus, and Canada pay their agricultural officers a relatively small multiple of their clerical officer’s wage.

Across positions within countries, the variance also can be quite extreme. In Kenya, the standard deviation of the index is 208 relative to a mean index for a clerical officer of 100. In Trinidad and Tobago, the standard deviation reaches 247. In other countries, the salary spread is clearly quite tight: in Sweden and Denmark, the standard deviation is only 18 and 38, respectively.

Distribution of Employees Across Salary Ranges

For 14 countries, it also proved possible to estimate the frequency distribution of government employees by salary range. This allows the calculation of a “Lorenz” curve on the government salary structure of a given country, viz., a cumulative distribution of the number of employees at different salary levels and the cumulative level of total salaries paid to employees below a given salary level. Table 12 provides summary statistics drawn from these estimates; Chart 1 illustrates the distributions of four countries; and Charts 2-5 (in Appendix I) illustrate the salary distribution in all the countries for which there were data.

Table 12.

Degree of Inequality in Distribution of Salaries

(In percent)

article image
Chart 1
Chart 1

The Netherlands, Sweden, Kenya, and Senegal; Lorenz Curve of Government Salary Structure

There are significant variations in the degree of equality in the overall salary structure. Countries such as Korea, New Zealand, Sweden, and the United Kingdom indicate a relatively high degree of equality. Others such as Guatemala, Kenya, and Senegal have relatively unequal salary structures. At the same time, the United Kingdom has the largest number of employees in the lower ranges but one of the more equal distributions; in this case it seems, rank may speak louder than salary. In Kenya, the top 10 percent earn 26 percent of the pay packet so that, in contrast to the United Kingdom, to be important in Kenya rank appears to require a pay differential. Korea is another country with an unusual distribution: the top 10 percent of the government work force earn only 13 percent of the total salary bill. In general, it can be seen that most of the more developed countries group their employment slightly more in the fourth and fifth divisions than do the developing countries, and, similarly, developing countries tend to skew their employment more into the second division of the salary range.

The degree of inequality will have a bearing on the impact of certain policy measures aimed at controlling expenditures, such as a general or selective freeze on vacancies. The greater the degree of inequality, the greater the necessity that the job freeze cover employees at the upper end of the salary range. Otherwise, the fiscal impact of the freeze may not be significant. In some countries, this may pose significant problems, particularly if the government has difficulties in recruiting higher-level civil servants.

There is no obvious relationship between the degree of inequality and the preferential wage salary status of government employees as proxied by the multiple of average central government salaries to per capita income. The OECD countries appear to have both a high degree of equality and a low multiple. Among the non-oil developing countries there is considerable variation; Kenya and Senegal appear to have a high degree of inequality and a high multiple; Korea has a high degree of equality in its salary structure, yet its public servants are well paid relative to the per capita income level; Guatemala has a high degree of inequality in its salary structure, but its employees do not appear well paid vis-à-vis other components of its labor force.

Cited By

Within Same Series

Other IMF Content

Other Publishers Content

Cover Government Employment and Pay
Government Employment and Pay
Some International Comparisons
Author: Mr. Alan A. Tait and Mr. Peter S. Heller
ISBN:
9781557750686
ISSN:
0251-6365
Publication Date:
31 Oct 1983
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781557750686.084
Pages:
76
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    The Netherlands, Sweden, Kenya, and Senegal; Lorenz Curve of Government Salary Structure

The Netherlands, Sweden, Kenya, and Senegal; Lorenz Curve of Government Salary Structure

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