## Box 1. Indicators

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### Compensation of employees — indicators and findings
- Indicators:
  - Compensation of employees as a share of GDP
  - Compensation of employees as a share of total spending
  - Compensation of employees as a share of domestic revenue
  - Compensation of employees compared to spending on non-wage outlays
- Key finding: Between 2001 and 2008, the average compensation of employees in education and health constituted, respectively, 70 percent and 50 percent of total sectoral spending in a sample of about 55–70 countries (Table 2).
- Interpretation: The share of employee compensation in health is lower than in education owing to typically higher operations and maintenance outlays in health (e.g., pharmaceuticals).
- Data sources noted: World Bank Public Expenditure Reviews frequently contain information on employee compensation as a share of total sectoral outlays.

### Issues in assessing government expenditures on employee compensation
- Misclassification and omissions:
  - Non-monetary benefits (travel, housing, allowances) may be classified under other goods and services, understating compensation recorded as wages and salaries.
  - Payments to government employees for public investment projects—particularly those financed by donors—may be recorded under capital spending, understating employee compensation.
  - Spending on consultants and temporary workers may be recorded under other categories, leading to understatement.
- Fraud and absenteeism:
  - Payment of wages to fictitious workers and absenteeism can cause average wages to appear higher than implied by wage and employment data.
- Institutional scope:
  - Exclusion of autonomous entities that perform core government functions (examples: revenue authorities, debt management agencies, education boards, health insurance providers) can understate government employee compensation.

### Government employment — indicators and findings
- Indicators:
  - Government employment as a percentage of private sector employment
  - Government employment as a percentage of total employment
  - Government employment as a percentage of the population
- Key uses:
  - Assess size of government employment relative to private sector and population needs.
  - Cross-country data on government employment as a percentage of population is more readily available.
- Regional patterns:
  - Government employment ratios are highest in Europe and generally in high-income countries as a percentage of the population; lowest in Africa.
  - High-income countries tend to have larger numbers of employees, with considerably higher employment at the sub-national level, influenced by education and health sectors.
- Sectoral notes:
  - Education typically employs more people as a share of population than health across regions except Europe.
  - High-income countries have a larger share of population employed in education and health (4½ percent) than low-income countries (1½ percent).
- Issues in assessing employment:
  - Size and scope of government (measured by government spending or value added to-GDP, and role in production and regulation) affect employment levels and affordability.
  - Employment guarantees (e.g., guaranteed jobs for university or teachers’ college graduates) can foreshadow employment increases.
  - Health and education staffing should be assessed using indicators such as student-teacher ratios and health workers per thousand population.
- Empirical note on absenteeism: Randomized surveys in developing countries detected absenteeism rates of about 19 percent for teachers and 35 percent for health workers (Banerjee, 2005; Chaudury and others, 2006).

### Government wages — indicators and findings
- Indicators:
  - Average government wages as a share of comparator private sector wages
  - Average government wage as a share of GDP per capita
  - Compression ratio: ratio of the highest government wage to the lowest on the main salary scale
- Measurement caveats:
  - Private sector comparators are difficult to obtain; comparisons must account for in-kind and non-monetary benefits and deferred compensation (pensions, disability, survivor benefits) and job security differences.
  - Average wage as a share of GDP per capita does not capture in-kind and intangible benefits.
  - Compression ratios: low ratios suggest skilled workers are under-paid and unskilled workers overpaid; low compression ratios are associated with corruption.
- Empirical findings on wage differentials:
  - Recent studies suggest differentials are negligible in Indonesia, France and the United Kingdom; favor lower level employees in Greece; and are large and favor public sector employees in India.
- Measurement issues and dynamics:
  - Differences in human capital: simple public-private comparisons may not control for human capital; more systematic approaches are needed.
  - Wage drift: automatic career progression can raise average wage levels as workforce ages and experience increases; wage drift can sometimes exceed GDP growth.
  - Indexation: formal indexation of wages to consumer prices or economy-wide measures can make wages high and inflexible and complicate macroeconomic management (example cited: indexation in Bosnia and Herzegovina contributed to inflationary pressures and jeopardized fiscal sustainability).

### Options for rationalizing government employment and wages
- General: High-quality reforms are difficult to implement quickly; short-term measures may be needed under severe fiscal pressure but should be replaced over time with sustainable reforms.
- Short-term options:
  - Temporary freeze on wages:
    - Can be overall or selective nominal freeze for a limited period.
    - Assuming unchanged employment, should reduce compensation of employees relative to GDP as the economy expands nominally.
    - May be offset by promotions, wage creep, or circumvention measures; examples: Benin (promotions offset freeze), Botswana (wage bill increased since 2008/09 due to wage creep).
    - Some countries implemented nominal wage cuts during crises: examples in 2009 include Bosnia and Herzegovina, Ireland, Latvia, Lithuania; in 2010, Spain. Legal challenges can occur (Bosnia and Herzegovina courts ruled cuts illegal).
  - Streamlining bonuses and allowances:
    - Tightening eligibility and reducing number/size of allowances increases transparency and fiscal savings.
    - Control of overtime via substitution with leave time or suspension of overtime premiums.
    - Reduction of “13th salary” used in many countries; example: Hungary eliminated the 13th salary in late 2009. Greece eliminated the 13th and 14th salaries in early 2010, replaced them with a fixed lower bonus payment, and cut allowances by 10 percent.
  - Partial or selected hiring freeze:
    - Natural attrition plus selective freezes in non-priority areas can reduce compensation without layoffs/severance costs.
    - Examples: Bosnia and Herzegovina, Greece, Romania froze government employment during the recent financial crisis.
    - Risks of extended hiring freezes: distorted age structure, service delivery challenges (example: Benin experienced large numbers retiring).
    - Legal complexities: judiciary may reverse dismissals or order compensation.
  - Temporary layoffs and extended leaves:
    - Used in some US states; in some countries governments offer extended sabbatical leave at reduced or unpaid pay.
  - Accelerated early retirement:
    - Requires careful assessment due to potential high future fiscal burdens from generous retirement packages and upfront severance payments.
- Medium-term reforms:
  - Rationalizing size and structure of government:
    - Employment reviews should accompany expenditure reviews and functional reviews to identify duplication and overlap.
  - Tightening link between pay and performance:
    - Linking pay increases to performance and reconsidering career advancement rules can decompress pay scales and improve incentives.
  - Strengthening payroll systems:
    - Public financial management reforms to strengthen payroll controls can eliminate fictitious workers and improve expenditure control.
  - Outsourcing non-core functions:
    - Potential candidates: transport, mail, cleaning, catering, maintenance.
    - Mixed results: United Kingdom savings from outsourcing ranged between 20 to 30 percent; Grenada experienced negligible savings and variable service quality.

### Key quantitative tables and figures (selected exact values preserved)
- Table 1. Government Compensation of Employees (central government / general government; sample sizes and percentages):
  - Africa: sample size 4; Central Government % of GDP 16.5; % of government expenditures 30.4; % of government revenues 29.5; General Government sample size 9; % of GDP 33.8; % of government expenditures 33.4; % of government revenues 30.7
  - Asia and Pacific: sample size 18; Central Government % of GDP 5.1; % of government expenditures 26.2; % of government revenues 23.1; General Government sample size 16; % of GDP 6.6; % of government expenditures 27.5; % of government revenues 22.9
  - Europe: sample size 4; Central Government % of GDP 15.7; % of government expenditures 17.4; % of government revenues 17.5; General Government sample size 40; % of GDP 10.2; % of government expenditures 26.5; % of government revenues 25.4
  - Western Hemisphere: sample size 24; Central Government % of GDP 8.2; % of government expenditures 31.0; % of government revenues 29.6; General Government sample size 15; % of GDP 9.2; % of government expenditures 36.0; % of government revenues 33.2
  - Middle East and Central Asia: sample size 19; Central Government % of GDP 7.1; % of government expenditures 28.9; % of government revenues 24.8; General Government sample size 11; % of GDP 8.3; % of government expenditures 32.8; % of government revenues 26.4
  - European Union: sample size 27; Central Government % of GDP 5.2; % of government expenditures 15.9; % of government revenues 16.3; General Government sample size 27; % of GDP 9.9; % of government expenditures 25.4; % of government revenues 25.3
  - Low-Income Countries: sample size 39; Central Government % of GDP 5.2; % of government expenditures 28.6; % of government revenues 27.9; General Government sample size 67; % of GDP 7.0; % of government expenditures 25.8; % of government revenues 26.8
  - Middle-Income Countries: sample size 68; Central Government % of GDP 7.3; % of government expenditures 27.6; % of government revenues 26.0; General Government sample size 44; % of GDP 8.7; % of government expenditures 31.8; % of government revenues 28.2
  - High-Income Countries: sample size 36; Central Government % of GDP 6.1; % of government expenditures 20.4; % of government revenues 18.6; General Government sample size 36; % of GDP 10.4; % of government expenditures 28.0; % of government revenues 25.9

- Table 2. Health and Education sector wage bills, 2001-08 (Percent of sectoral expenditures):
  - Education wage bills (sample sizes and values):
    - Africa: sample size 10; Wage bill 66.7
    - Asia and Pacific: sample size 8; Wage bill 64.7
    - Europe: sample size 40; Wage bill 65.2
    - Western Hemisphere: sample size 8; Wage bill 75.2
    - Middle East and Central Asia: sample size 6; Wage bill 76.1
    - Low-income: sample size 13; Wage bill 69.2
      - of which: Fragile States: sample size 7; Wage bill 65.6
    - Middle-income: sample size 25; Wage bill 73.8
    - High-income: sample size 34; Wage bill 61.4
    - Memorandum item Median: sample size 72; Wage bill 65.6
  - Health wage bills (sample sizes and values):
    - Africa: sample size 13; Wage bill 40.6
    - Asia and Pacific: sample size 4; Wage bill 45.1
    - Europe: sample size 26; Wage bill 43.5
    - Western Hemisphere: sample size 7; Wage bill 64.6
    - Middle East and Central Asia: sample size 6; Wage bill 55.5
    - Low-income: sample size 17; Wage bill 45.6
    - Middle-income: sample size 22; Wage bill 52.1
    - High-income: sample size 24; Wage bill 43.5
    - Memorandum item Median: sample size 56; Wage bill 42.8

- Table 3. Public sector employment (Percent of population; sample sizes and components):
  - Africa: sample size 12; public sector 3.9; General Government 3.8; Central Government 1.9; Subnational Governments 1.3; Education 1.0; Health 0.9; Armed forces 0.4; Public enterprises 1.5
  - Asia and Pacific: sample size 22; public sector 4.4; General Government 4.2; Central Government 2.7; Subnational Governments 1.4; Education 1.1; Health 0.7; Armed forces 0.9; Public enterprises 0.6
  - Europe: sample size 41; public sector 10.5; General Government 7.7; Central Government 3.6; Subnational Governments 4.5; Education 2.4; Health 2.5; Armed forces 0.8; Public enterprises 3.6
  - Western Hemisphere: sample size 26; public sector 6.8; General Government 5.3; Central Government 1.4; Subnational Governments 2.6; Education 1.8; Health 0.8; Armed forces 0.4; Public enterprises 4.1
  - Middle East and Central Asia: sample size 14; public sector 6.3; General Government 4.6; Central Government 2.7; Subnational Governments 5.2; Education 2.0; Health 0.8; Armed forces 1.1; Public enterprises 3.6
  - European Union: sample size 27; public sector 10.0; General Government 7.9; Central Government 3.4; Subnational Governments 4.7; Education 2.6; Health 2.3; Armed forces 0.6; Public enterprises 2.8
  - Low-income countries: sample size 15; public sector 4.0; General Government 1.1; Central Government 0.4; Subnational Governments 0.9; Education 0.8; Health 0.6; Armed forces 0.4; Public enterprises 8.1
  - Middle-income countries: sample size 56; public sector 6.8; General Government 5.3; Central Government 2.4; Subnational Governments 2.7; Education 2.1; Health 1.1; Armed forces 0.7; Public enterprises 3.7
  - High-income countries: sample size 44; public sector 9.2; General Government 7.9; Central Government 3.6; Subnational Governments 4.7; Education 2.1; Health 2.4; Armed forces 0.8; Public enterprises 1.9

- Table 4. Public sector wages (number of countries and wage ratios):
  - Africa: number of countries 3; ratio of average public administration wage to per capita GDP 1.3; ratio of public sector to financial sector wages 0.7; ratio of public sector to manufacturing wages 1.8
  - Asia and Pacific: number of countries 7; ratio of average public administration wage to per capita GDP 1.4; ratio of public sector to financial sector wages 0.9; ratio of public sector to manufacturing wages 1.4
  - Europe: number of countries 28; ratio of average public administration wage to per capita GDP 1.4; ratio of public sector to financial sector wages 0.7; ratio of public sector to manufacturing wages 1.3
  - Western Hemisphere: number of countries 11; ratio of average public administration wage to per capita GDP 1.4; ratio of public sector to financial sector wages 0.8; ratio of public sector to manufacturing wages 1.3
  - Middle East and Central Asia: number of countries 8; ratio of average public administration wage to per capita GDP 1.2; ratio of public sector to financial sector wages 0.5; ratio of public sector to manufacturing wages 1.3
  - European Union: number of countries 17; ratio of average public administration wage to per capita GDP 1.3; ratio of public sector to financial sector wages 0.7; ratio of public sector to manufacturing wages 1.3
  - Low-income countries: number of countries 4; ratio of average public administration wage to per capita GDP 1.9; ratio of public sector to financial sector wages 0.7; ratio of public sector to manufacturing wages 1.4
  - Middle-income countries: number of countries 35; ratio of average public administration wage to per capita GDP 1.4; ratio of public sector to financial sector wages 0.6; ratio of public sector to manufacturing wages 1.4
  - High-income countries: number of countries 18; ratio of average public administration wage to per capita GDP 1.2; ratio of public sector to financial sector wages 0.8; ratio of public sector to manufacturing wages 1.3

### Appendix — structure and components
- Figure 1: The Main Components of Government Employment (diagrammatic breakdown of total public employment into SOE employees, General Government, Armed Forces, total civilian, central government, total subnational government, education, health, police, civilian central government excluding education/health/police, subnational government excluding education/health/police, permanent and temporary employees, daily paid employees, total education employees, total health employees, total police).
- Data notes:
  - Table 1 sources: Government Finance Statistics database (IMF), and IMF staff estimates. General government, consolidated central government, or budgetary central government, annual averages for 2000–08 depending on availability.
  - Table 2 sources: Public Expenditure Reviews, The World Bank; Eurostat for EU member states; OECD Stat for non-EU OECD countries and Israel. Average of annual observations, depending on data availability.
  - Table 3 sources: LABORSTA database (ILO); The Military Balance (International Institute for Strategic Studies). Annual averages for the 2000–08 period.
  - Table 4 sources: LABORSTA database (ILO); WEO (IMF). Annual averages for the 2000–08 period. Public sector wages include public administration, defense and compulsory social security.

*Technical Notes and Manuals 10/15 | 2010 — Box 1. Indicators*

### Box 1. Indicators

### Box 1. Indicators

### Compensation of employees — indicators and findings
- Indicators:
  - Compensation of employees as a share of GDP
  - Compensation of employees as a share of total spending
  - Compensation of employees as a share of domestic revenue
  - Compensation of employees compared to spending on non-wage outlays
- Key finding: Between 2001 and 2008, the average compensation of employees in education and health constituted, respectively, 70 percent and 50 percent of total sectoral spending in a sample of about 55–70 countries (Table 2).
- Interpretation: The share of employee compensation in health is lower than in education owing to typically higher operations and maintenance outlays in health (e.g., pharmaceuticals).
- Data sources noted: World Bank Public Expenditure Reviews frequently contain information on employee compensation as a share of total sectoral outlays.

### Issues in assessing government expenditures on employee compensation
- Misclassification and omissions:
  - Non-monetary benefits (travel, housing, allowances) may be classified under other goods and services, understating compensation recorded as wages and salaries.
  - Payments to government employees for public investment projects—particularly those financed by donors—may be recorded under capital spending, understating employee compensation.
  - Spending on consultants and temporary workers may be recorded under other categories, leading to understatement.
- Fraud and absenteeism:
  - Payment of wages to fictitious workers and absenteeism can cause average wages to appear higher than implied by wage and employment data.
- Institutional scope:
  - Exclusion of autonomous entities that perform core government functions (examples: revenue authorities, debt management agencies, education boards, health insurance providers) can understate government employee compensation.

### Government employment — indicators and findings
- Indicators:
  - Government employment as a percentage of private sector employment
  - Government employment as a percentage of total employment
  - Government employment as a percentage of the population
- Key uses:
  - Assess size of government employment relative to private sector and population needs.
  - Cross-country data on government employment as a percentage of population is more readily available.
- Regional patterns (Table 3 summary points):
  - Government employment ratios are highest in Europe and generally in high-income countries as a percentage of the population; lowest in Africa.
  - High-income countries tend to have larger numbers of employees, with considerably higher employment at the sub-national level, influenced by education and health sectors.
- Sectoral notes:
  - Education typically employs more people as a share of population than health across regions except Europe.
  - High-income countries have a larger share of population employed in education and health (4½ percent) than low-income countries (1½ percent).
- Issues in assessing employment:
  - Size and scope of government (measured by government spending or value added to-GDP, and role in production and regulation) affect employment levels and affordability.
  - Employment guarantees (e.g., guaranteed jobs for university or teachers’ college graduates) can foreshadow employment increases.
  - Health and education staffing should be assessed using indicators such as student-teacher ratios and health workers per thousand population.
- Empirical note on absenteeism: Randomized surveys in developing countries detected absenteeism rates of about 19 percent for teachers and 35 percent for health workers (Banerjee, 2005; Chaudury and others, 2006).

### Government wages — indicators and findings
- Indicators:
  - Average government wages as a share of comparator private sector wages
  - Average government wage as a share of GDP per capita
  - Compression ratio: ratio of the highest government wage to the lowest on the main salary scale
- Measurement caveats:
  - Private sector comparators are difficult to obtain; comparisons must account for in-kind and non-monetary benefits and deferred compensation (pensions, disability, survivor benefits) and job security differences.
  - Average wage as a share of GDP per capita does not capture in-kind and intangible benefits.
  - Compression ratios: low ratios suggest skilled workers are under-paid and unskilled workers overpaid; low compression ratios are associated with corruption.
- Empirical findings on wage differentials:
  - Recent studies suggest differentials are negligible in Indonesia, France and the United Kingdom; favor lower level employees in Greece; and are large and favor public sector employees in India.
- Measurement issues and dynamics:
  - Differences in human capital: simple public-private comparisons may not control for human capital; more systematic approaches are needed.
  - Wage drift: automatic career progression can raise average wage levels as workforce ages and experience increases; wage drift can sometimes exceed GDP growth.
  - Indexation: formal indexation of wages to consumer prices or economy-wide measures can make wages high and inflexible and complicate macroeconomic management (example cited: indexation in Bosnia and Herzegovina contributed to inflationary pressures and jeopardized fiscal sustainability).

### Options for rationalizing government employment and wages
- General: High-quality reforms are difficult to implement quickly; short-term measures may be needed under severe fiscal pressure but should be replaced over time with sustainable reforms.

- Short-term options:
  - Temporary freeze on wages:
    - Can be overall or selective nominal freeze for a limited period.
    - Assuming unchanged employment, should reduce compensation of employees relative to GDP as the economy expands nominally.
    - May be offset by promotions, wage creep, or circumvention measures; examples: Benin (promotions offset freeze), Botswana (wage bill increased since 2008/09 due to wage creep).
    - Some countries implemented nominal wage cuts during crises: examples in 2009 include Bosnia and Herzegovina, Ireland, Latvia, Lithuania; in 2010, Spain. Legal challenges can occur (Bosnia and Herzegovina courts ruled cuts illegal).
  - Streamlining bonuses and allowances:
    - Tightening eligibility and reducing number/size of allowances increases transparency and fiscal savings.
    - Control of overtime via substitution with leave time or suspension of overtime premiums.
    - Reduction of “13th salary” used in many countries; example: Hungary eliminated the 13th salary in late 2009. Greece eliminated the 13th and 14th salaries in early 2010, replaced them with a fixed lower bonus payment, and cut allowances by 10 percent.
  - Partial or selected hiring freeze:
    - Natural attrition plus selective freezes in non-priority areas can reduce compensation without layoffs/severance costs.
    - Examples: Bosnia and Herzegovina, Greece, Romania froze government employment during the recent financial crisis.
    - Risks of extended hiring freezes: distorted age structure, service delivery challenges (example: Benin experienced large numbers retiring).
    - Legal complexities: judiciary may reverse dismissals or order compensation.
  - Temporary layoffs and extended leaves:
    - Used in some US states; in some countries governments offer extended sabbatical leave at reduced or unpaid pay.
  - Accelerated early retirement:
    - Requires careful assessment due to potential high future fiscal burdens from generous retirement packages and upfront severance payments.

- Medium-term reforms:
  - Rationalizing size and structure of government:
    - Employment reviews should accompany expenditure reviews and functional reviews to identify duplication and overlap.
  - Tightening link between pay and performance:
    - Linking pay increases to performance and reconsidering career advancement rules can decompress pay scales and improve incentives.
  - Strengthening payroll systems:
    - Public financial management reforms to strengthen payroll controls can eliminate fictitious workers and improve expenditure control.
  - Outsourcing non-core functions:
    - Potential candidates: transport, mail, cleaning, catering, maintenance.
    - Mixed results: United Kingdom savings from outsourcing ranged between 20 to 30 percent; Grenada experienced negligible savings and variable service quality.

### Key quantitative tables and figures (selected exact values preserved)
- Table 1. Government Compensation of Employees (central government / general government; sample sizes and percentages):
  - Africa: sample size 4; Central Government % of GDP 16.5; % of government expenditures 30.4; % of government revenues 29.5; General Government sample size 9; % of GDP 33.8; % of government expenditures 33.4; % of government revenues 30.7
  - Asia and Pacific: sample size 18; Central Government % of GDP 5.1; % of government expenditures 26.2; % of government revenues 23.1; General Government sample size 16; % of GDP 6.6; % of government expenditures 27.5; % of government revenues 22.9
  - Europe: sample size 4; Central Government % of GDP 15.7; % of government expenditures 17.4; % of government revenues 17.5; General Government sample size 40; % of GDP 10.2; % of government expenditures 26.5; % of government revenues 25.4
  - Western Hemisphere: sample size 24; Central Government % of GDP 8.2; % of government expenditures 31.0; % of government revenues 29.6; General Government sample size 15; % of GDP 9.2; % of government expenditures 36.0; % of government revenues 33.2
  - Middle East and Central Asia: sample size 19; Central Government % of GDP 7.1; % of government expenditures 28.9; % of government revenues 24.8; General Government sample size 11; % of GDP 8.3; % of government expenditures 32.8; % of government revenues 26.4
  - European Union: sample size 27; Central Government % of GDP 5.2; % of government expenditures 15.9; % of government revenues 16.3; General Government sample size 27; % of GDP 9.9; % of government expenditures 25.4; % of government revenues 25.3
  - Low-Income Countries: sample size 39; Central Government % of GDP 5.2; % of government expenditures 28.6; % of government revenues 27.9; General Government sample size 67; % of GDP 7.0; % of government expenditures 25.8; % of government revenues 26.8
  - Middle-Income Countries: sample size 68; Central Government % of GDP 7.3; % of government expenditures 27.6; % of government revenues 26.0; General Government sample size 44; % of GDP 8.7; % of government expenditures 31.8; % of government revenues 28.2
  - High-Income Countries: sample size 36; Central Government % of GDP 6.1; % of government expenditures 20.4; % of government revenues 18.6; General Government sample size 36; % of GDP 10.4; % of government expenditures 28.0; % of government revenues 25.9

- Table 2. Health and Education sector wage bills, 2001-08 (Percent of sectoral expenditures):
  - Education wage bills (sample sizes and values):
    - Africa: sample size 10; Wage bill 66.7
    - Asia and Pacific: sample size 8; Wage bill 64.7
    - Europe: sample size 40; Wage bill 65.2
    - Western Hemisphere: sample size 8; Wage bill 75.2
    - Middle East and Central Asia: sample size 6; Wage bill 76.1
    - Low-income: sample size 13; Wage bill 69.2
      - of which: Fragile States: sample size 7; Wage bill 65.6
    - Middle-income: sample size 25; Wage bill 73.8
    - High-income: sample size 34; Wage bill 61.4
    - Memorandum item Median: sample size 72; Wage bill 65.6
  - Health wage bills (sample sizes and values):
    - Africa: sample size 13; Wage bill 40.6
    - Asia and Pacific: sample size 4; Wage bill 45.1
    - Europe: sample size 26; Wage bill 43.5
    - Western Hemisphere: sample size 7; Wage bill 64.6
    - Middle East and Central Asia: sample size 6; Wage bill 55.5
    - Low-income: sample size 17; Wage bill 45.6
    - Middle-income: sample size 22; Wage bill 52.1
    - High-income: sample size 24; Wage bill 43.5
    - Memorandum item Median: sample size 56; Wage bill 42.8

- Table 3. Public sector employment (Percent of population; sample sizes and components):
  - Africa: sample size 12; public sector 3.9; General Government 3.8; Central Government 1.9; Subnational Governments 1.3; Education 1.0; Health 0.9; Armed forces 0.4; Public enterprises 1.5
  - Asia and Pacific: sample size 22; public sector 4.4; General Government 4.2; Central Government 2.7; Subnational Governments 1.4; Education 1.1; Health 0.7; Armed forces 0.9; Public enterprises 0.6
  - Europe: sample size 41; public sector 10.5; General Government 7.7; Central Government 3.6; Subnational Governments 4.5; Education 2.4; Health 2.5; Armed forces 0.8; Public enterprises 3.6
  - Western Hemisphere: sample size 26; public sector 6.8; General Government 5.3; Central Government 1.4; Subnational Governments 2.6; Education 1.8; Health 0.8; Armed forces 0.4; Public enterprises 4.1
  - Middle East and Central Asia: sample size 14; public sector 6.3; General Government 4.6; Central Government 2.7; Subnational Governments 5.2; Education 2.0; Health 0.8; Armed forces 1.1; Public enterprises 3.6
  - European Union: sample size 27; public sector 10.0; General Government 7.9; Central Government 3.4; Subnational Governments 4.7; Education 2.6; Health 2.3; Armed forces 0.6; Public enterprises 2.8
  - Low-income countries: sample size 15; public sector 4.0; General Government 1.1; Central Government 0.4; Subnational Governments 0.9; Education 0.8; Health 0.6; Armed forces 0.4; Public enterprises 8.1
  - Middle-income countries: sample size 56; public sector 6.8; General Government 5.3; Central Government 2.4; Subnational Governments 2.7; Education 2.1; Health 1.1; Armed forces 0.7; Public enterprises 3.7
  - High-income countries: sample size 44; public sector 9.2; General Government 7.9; Central Government 3.6; Subnational Governments 4.7; Education 2.1; Health 2.4; Armed forces 0.8; Public enterprises 1.9

- Table 4. Public sector wages (number of countries and wage ratios):
  - Africa: number of countries 3; ratio of average public administration wage to per capita GDP 1.3; ratio of public sector to financial sector wages 0.7; ratio of public sector to manufacturing wages 1.8
  - Asia and Pacific: number of countries 7; ratio of average public administration wage to per capita GDP 1.4; ratio of public sector to financial sector wages 0.9; ratio of public sector to manufacturing wages 1.4
  - Europe: number of countries 28; ratio of average public administration wage to per capita GDP 1.4; ratio of public sector to financial sector wages 0.7; ratio of public sector to manufacturing wages 1.3
  - Western Hemisphere: number of countries 11; ratio of average public administration wage to per capita GDP 1.4; ratio of public sector to financial sector wages 0.8; ratio of public sector to manufacturing wages 1.3
  - Middle East and Central Asia: number of countries 8; ratio of average public administration wage to per capita GDP 1.2; ratio of public sector to financial sector wages 0.5; ratio of public sector to manufacturing wages 1.3
  - European Union: number of countries 17; ratio of average public administration wage to per capita GDP 1.3; ratio of public sector to financial sector wages 0.7; ratio of public sector to manufacturing wages 1.3
  - Low-income countries: number of countries 4; ratio of average public administration wage to per capita GDP 1.9; ratio of public sector to financial sector wages 0.7; ratio of public sector to manufacturing wages 1.4
  - Middle-income countries: number of countries 35; ratio of average public administration wage to per capita GDP 1.4; ratio of public sector to financial sector wages 0.6; ratio of public sector to manufacturing wages 1.4
  - High-income countries: number of countries 18; ratio of average public administration wage to per capita GDP 1.2; ratio of public sector to financial sector wages 0.8; ratio of public sector to manufacturing wages 1.3

### Appendix — structure and components
- Figure 1: The Main Components of Government Employment (diagrammatic breakdown of total public employment into SOE employees, General Government, Armed Forces, total civilian, central government, total subnational government, education, health, police, civilian central government excluding education/health/police, subnational government excluding education/health/police, permanent and temporary employees, daily paid employees, total education employees, total health employees, total police).
- Data notes:
  - Table 1 sources: Government Finance Statistics database (IMF), and IMF staff estimates. General government, consolidated central government, or budgetary central government, annual averages for 2000–08 depending on availability.
  - Table 2 sources: Public Expenditure Reviews, The World Bank; Eurostat for EU member states; OECD Stat for non-EU OECD countries and Israel. Average of annual observations, depending on data availability.
  - Table 3 sources: LABORSTA database (ILO); The Military Balance (International Institute for Strategic Studies). Annual averages for the 2000–08 period.
  - Table 4 sources: LABORSTA database (ILO); WEO (IMF). Annual averages for the 2000–08 period. Public sector wages include public administration, defense and compulsory social security.

*Technical Notes and Manuals 10/15 | 2010 — Box 1. Indicators*

### References

### References

### Cited literature
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- Bargain, O., and B. Melly, 2008, “Public Sector Pay Gap in France: New Evidence Using Panel Data,” Discussion Paper No. 3427 (Bonn: Institute for the Study of Labor (IZA)).
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- Calvo, E., and J. B. Williamson, 2008, “Old-age Pension Reform and Modernization Pathways: Lessons for China from Latin America,” Journal of Aging Studies, Vol. 22, Issue 1, January 2008, pp. 74–87.
- Center for Global Development, 2007, Does the IMF Constrain Health Spending in Poor Countries: Evidence and an Agenda for Action, Report of the Working Group on IMF Programs and Health Spending, Center for Global Development (Washington).
- Chaudhury, N., and others, 2006, “Missing in Action: Teacher and Health Worker Absence in Developing Countries,” Journal of Economic Perspectives, Vol. 20, No. 1.
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- Disney, R., and A. Gosling, 2008, “Changing Public Sector Wage Differentials in the UK,” The Institute for Fiscal Studies, Working Paper 08/02 (London).
- Fedelino, A., G. Schwartz, and M. Verhoeven, 2006, “Aid Scaling Up: Do Wage Bill Ceilings Stand in the Way?” IMF Working Paper 06/106, (Washington: International Monetary Fund).
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- Gupta, S., G. Schwartz, S. Tareq, R. Allen, I. Adenauer, K. Fletcher, and D. Last, 2008, Fiscal Management of Scaled-Up Aid (Washington: International Monetary Fund).
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- International Monetary Fund, 2010, “From Stimulus to Consolidation—Revenue and Expenditure Policies in Advanced and Emerging Economies,” IMF Policy Paper, April. Available at www.imf.org/external/np/pp/eng/2010/043010a.pdf.	
- Izvorski, I., and S. Kakhonen, 2008, Public Expenditure Policies in South East Europe, (Washington: The World Bank).
- Loshkin, M., and B. Jovanovic, 2003, “Wage Differentials and State-Private Sector Employment Choice in the Federal Republic of Yugoslavia,” World Bank Policy Research Working Paper 2959, (Washington: The World Bank).
- Organization for Economic Cooperation and Development, 2007, “Towards Better Measurement of Government,” OECD Working Papers on Public Governance, 2007/1 (Paris: OECD Publishing).
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### Databases
- ILO — http://laborsta.ilo.org/
- OECD — http://stats.oecd.org/index.aspx?r=964704

### Publication and contact details
- Technical Notes and Manuals 10/15  |  2010        15
- TNM/10/15
- International Monetary Fund
- Fiscal Affairs Department
- 700 19th Street NW
- Washington, DC 20431
- USA
- Tel: 1-202-623-8554
- Fax: 1-202-623-6073
- Evaluating Government Employment and Compensation
- Benedict Clements, Sanjeev Gupta, Izabela Karpowicz, and Shamsuddin Tareq
- Fiscal Affairs Department
- INTerNATIoNAl MoNeTAry FUND
- Technical noTes and Manuals

*Content derived from _tnm1015 - References.*

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