Workforce resilience An international comparison of the public and private sectors
Government workforces have not been immune to the pressures of the Great Recession and the volatility of recent years. How have governments around the world responded?
The Great Recession and the volatility of recent years have challenged established and emerging markets alike, pushing workforces to adapt to heightened levels of uncertainty while also offering workers new opportunities. Government workforces have not been immune to these pressures. Moreover, in addition to coping with the challenges of general economic malaise, governments have had to meet the countercyclical demands for government services that often accompany a weak economy. How have governments around the world responded?
In this comparative analysis, we analyze the government workforce relative to the private sector workforce across countries for the years 2005–10. First, we examine variations in government size across countries using three different metrics of scale. Next, we consider the growth—or shrinkage—of the government workforce compared with that of the private sector over the same time period. From there, we examine which jobs are driving these trends in government employment. Public administration and defense stand out as areas that have actually expanded headcount, while other areas such as public health and education have seen reduced headcount. Comparisons between the public and private sector also take gender into account, recognizing higher female labor participation in the public sector compared with the private sector.1
Size and growth
A government workforce’s relative “size” varies considerably by the measure used
The magnitude and composition of the government workforce is one of the chief ways that a country’s citizens manifest their unique vision for the role of government. Developed economies tend to dedicate a greater share of their workforce and GDP to the public sector than less developed countries. For many high-income countries in the Organisation for Economic Co-operation and Development (OECD), the salaries and benefits of the public sector workforce amount to 5–10 percent of gross domestic product (GDP), with those of the Scandinavian countries even higher, at around 15 percent. In contrast, developing countries tend to maintain smaller governments; in Guatemala, Peru, and Chile, public sector wages account for only around 5 percent of GDP.2
When the size of the government workforce is viewed as a share of the total labor force instead of a share of GDP, the variation among countries—even among developed countries—grows much wider, as shown in figure 1.
The highest and lowest ends of the spectrum in figure 1 visibly cluster by region, with Northern Europe occupying four of the five highest shares of the labor force on a percentage basis, and Asia the two lowest. In Scandinavia, every third worker you meet may work in government, whereas in Asia the figure is only one in 20.
Besides the share of GDP dedicated to public sector wages and the percentage of the population employed by government, another indicator of government workforce growth is simply the raw headcount of government employees over time.
Workforce size: Three angles
Each of these three measures—percentage of GDP, percentage of the total labor force, and headcount—presents a different perspective on a country’s government workforce composition. Trends that may appear major in percentage terms—such as Colombia’s 20 percent contraction in government headcount within 5 years—must be viewed in the context of other measures of size, such as the fact that Colombia’s government employs just 5 percent of the small country’s workforce. To overcome the bias of comparing percentages, figure 2 compares each country’s government workforce against its private sector workforce in absolute numerical terms.
Clearly, countries such as the United States will have much higher headcount in government, as well as in most other labor categories, based on sheer population size.
In figure 3, which compares the 10 biggest public sector employers in percentage terms with the 10 biggest public sector employers in absolute terms, we see just how disparate these two measures are for the 28 countries we analyzed.3 Only two countries, Poland and the Czech Republic, appear in both lists. Within this collection of countries, the percentages are highest in the smaller countries of Scandinavia and Eastern Europe.
Figure 3. The 10 largest public sectors, absolute vs. percentage
Job growth in the private sector outpaces the public sector by a narrow margin
Between 2005 and 2010, median private sector job growth just barely outpaced public sector growth, expanding 4.1 percent compared with the public sector’s 3.4 percent across the 28 countries analyzed (figure 4). But the private sector’s overall stronger employment growth slightly belies how variable performance was across geographies. While Eastern European job markets stumbled, for instance, Ireland’s employment skyrocketed and then plummeted. In contrast, public sector growth trends were far steadier and more consistent across countries.
In a show of just how close private and public sector job growth were to each other between 2005 and 2010, half of the countries analyzed had public sectors that grew faster than their private sectors, including countries like the United Kingdom that have since introduced significant austerity measures. In 2010, the United Kingdom’s incoming coalition government set a goal of reducing central government administration costs by a third, eliminating over 100,000 jobs.4 Now the UK civil service is 23 percent smaller than it was in 2005.
Many countries that maintained high public sector growth rates in recent years despite weak economic conditions, particularly those in Europe such as Spain and Cyprus, have been forced to adopt cutbacks and measures to reduce spending by international financial institutions. Meanwhile, some countries, even Poland and the Scandinavian country Sweden, reduced their public sector workforce early in the recession.
That said, the majority of countries we analyzed emerged from the Great Recession with slightly expanded public sector workforces in an otherwise challenging employment landscape. This leads to the question of what types of jobs were responsible for this growth.
Employment trends: Government growth greatest in public administration, defense
Education, health care, defense, and public administration dominate the public sector job landscape across the 17 countries we analyzed, based on available data.5 The most dramatic shift in the allocation of government workers between 2005 and 2010 was the growth of jobs in public administration and defense. Between 2005 and 2010, the share of the government workforce aligned to public administration and defense increased 3 percentage points overall, as shown in figure 5. Efforts to reduce overhead and unnecessary spending are evidenced by workforce reductions in two categories: business, administrative, and support activities; and utilities, infrastructure, and natural resource management.
Figure 5. Public sector employment by category: 2005 vs. 2010
A look beneath the modest movement in topline figures reveals wide variation across the 17 countries analyzed. The Philippines and Ukraine experienced the most significant job growth in public administration and defense, with the Philippines expanding its government workforce by a dramatic 29 percent in this category. In contrast, Scandinavian countries bypassed this trend completely.
Gender composition: Public tops private sector in female employment
The balance between women and men in government is much closer to parity than in the private sector for the countries evaluated in this analysis.6 In these countries, on average, 52 percent of the government workforce in 2010 was female, compared with 41 percent in the private sector. This difference between the public and private sectors is particularly striking in countries with low female participation rates in the private sector (see figure 6). For example, 17 percent of Egypt’s private sector is female, while 26 percent of government workers are female. Egypt is not alone in having few female workers in the private sector; North Africa and the Middle East have the lowest female labor force participation rates in the world.7 Despite the rising education level of women in these regions, which often corresponds to increased employment, the percentage of women in the workforce has not risen proportionately.8
The widest gender gap between the public and private sectors occurs in Denmark, where 68 percent of government workers are female, compared with only 37 percent of workers in the private sector. The Danish government is seeking to increase the number of women leading Danish enterprises, since the percentage of Danish women in management is well below the European Union’s average.9 To this end, Denmark formed a gender equality charter in 2008, forging a partnership between public institutions and private companies to advance this goal.
Female labor participation inched upward in the public and private sectors alike between 2005 and 2010, increasing 1 percent in the public sector and 2 percent in the private sector. Of course, participation is just the first measure of engagement in the workforce; as female participation has risen, it has been matched by growing scrutiny of both women’s ability to advance to senior levels within their organizations and of the job types and fields where women are choosing to work.
Attention to the former issue led to the formation of the Federal Glass Ceiling Commission in the United States during the mid-1990s, which found that 95–97 percent of senior managers in the Fortune 1,000 industrial and Fortune 500 companies were male. This was due in large part to the small percentage of women with experience in the functional areas—finance, sales, and production—required to reach senior positions.10 Globally, women have had comparatively greater success climbing to leadership positions in government. Nearly 10 percent of member countries in the United Nations are led by female heads of state, whereas only 3 percent of the top 1,000 multinational companies have a female president or CEO.11
Around the same time, the Cabinet Office in the United Kingdom investigated the low number of women advancing in science, a challenge in the United Kingdom as well as in Canada and the United States.12 Since then, the number of women excelling in business and science has modestly increased, but remains much smaller than the number of men. The occupations that employ the largest number of women in the United States, where data is particularly rich, still conform to traditional gender roles—educators, nurses, and secretaries.13