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The public sector comprises the general government sector plus all public corporations including the central bank.

The scope of the public sector can be defined in a variety of ways. One option is to reason in terms of the status of employees. This criterion is satisfactory in some countries, in which the vast majority of government workers are civil servants. But this is not the most widespread case - quite the contrary, since the trend in many OECD countries is to recruit staff on fixed-term (i.e. non-civil service) contracts. Even so, civil servants or not, a distinction can be made between personnel subject to public law and those subject to private law, and especially those covered by industry- or company-wide collective agreements. But the far-reaching changes that have affected public services since the late 1980s will probably make that distinction inoperative in more and more countries. This is already the case in New Zealand, for example, where all salaried workers in both the public and private sectors are subject to the same labour legislation (the Employment Contracts Act 1991).

To define the scope of the public sector on the basis of the employer’s identity would seem more satisfactory than the previous criterion. Moreover, the employer’s identity is the criterion used by the OECD Public Management Service in its work on Public Sector Pay Trends. As part of that activity, wage bill trends are analysed in parallel with trends in the “corresponding” employment (i.e. personnel paid directly by the public authorities). This approach, which is warranted for strict analysis of pay bill trends, shows its limitations as soon as there is any intention of comparing the volume of public employment from one country to another. The first difficulty stems from the diverse ways of financing public expenditure between the central government, regions, provinces and municipalities, and, in some cases, between a federal government and states. Accordingly, if the chosen criteria is “who pays?”, then, in the case of the National Health Service (NHS) in the United Kingdom, employees of NHS Trusts - health service provider units that have opted to change their status, and which now operate with independent financing arrangements -should not be counted. The difficulty is then compounded by the fact that NHS Trust employees hired before their employer’s change of status can opt to retain their previous contract of employment. In that case, their conditions of employment and compensation are set at the national level by Pay Review Bodies and not locally by their employer.

(OECD, 1997, Measuring Public Employment in OECD Countries: Sources, Methods and Results, OECD, Paris)


Source Publication:
The OECD Economic Outlook: Sources and Methods.

Cross References:
Private sector


Statistical Theme: Financial statistics

Created on Tuesday, September 25, 2001

Last updated on Friday, March 28, 2014