Public Sector Employment in Europe: Where Will the Decline End?*
The developments in the public sector have attracted growing attention in the last two decades. This interest is caused by the expansion of public expenditure, the growing state debt and the consequences of demographic aging and rising unemployment for the financing of social security and social services. Since the late 1970s governments have felt the need to control public expenditure in order to consolidate state finances. During the 1980s some success with respect to stabilizing or even reducing government outlays was achieved, although since 1989 public expenditure has been rising again.
Public expenditure is closely related to public employment. Roughly 40 per cent of all public expenditure is spent in the form of salaries for public employees. If pensions are added, the share is even much higher. Thus one of the most important measures for curbing public expenditure is to halt or reduce public employment. Many governments have therefore tried since the early 80s to consolidate state finances by introducing measures to reduce public employment or to increase productivity in the public sector.
Partially there is a relationship, but not entirely, as the rather high unexplained variance shows. There are congruent cases where state expenditure and government employment are high resp. the opposite, and there are also incongruent cases, where state expenditure is high, but government employment is low (the Netherlands, Italy); or, on the other hand, cases where state expenditure is low and government employment is high (Australia). Thus different models of state activity and, consequently, of public employment exist in industrialized countries.
Furthermore, the individual countries are at different levels of economic development, and therefore face different problems. Consequently, there are no universal solutions for all countries. Thus, the pattern of public employment in different countries remains complex. As a consequence, developmental trends have to be studied in relation to national variations. Therefore the attempt is made in this article to present a general framework by looking at international trends in government employment.
The main development in public sector employment can be characterized as a decline after a long growth period. This contraction is accompanied by a feminization of and an increase in part-time work in the public sector. Other developments are: an increase in the number of higher qualified employees, a decline in the number of non-permanent public employees and - most importantly - shifts in the functional composition of public employment.
2 Main trends since the mid-70s
Here the main empricial trends in advanced industrialized countries will be described and analyzed. First, the aggregate trend of public employment will be outlined. It will also be disaggregated by sex. Further steps will be a look at the relation of part-time to full-time work. Other important topics dealt with will be trends in different status groups in the public sector, especially the effects of education.
Diachronous developments: Growth, consolidation, devolution
The following section presents data on general government employment in the OECD countries and its historical development since the 1960s. It has to be noted that these employment figures refer to "general government employment", as defined by the OECD National Accounts statistics which corresponds to the UN National Accounts statistics. Therefore public enterprises producing and selling goods for the market are normally not included. Thus, these figures are not figures for "public sector employment" and are generally much smaller than public sector employment ratios, as for instance used by Rose et al. (1985).1
After World War II the share of general government employment in nearly all developed industrialized countries was around 10 per cent. In 1960, of all European countries only Belgium and Sweden had shares higher than 10 per cent. On average, the share of general government employment nearly doubled from 11.2 per cent to 18.2 per cent in all 15 EU countries. The growth rates between the individual countries were very different in this respect. The highest rate could be found in the Nordic welfare states. In Denmark the share doubled, in Finland the share trebled, and in Sweden the share almost trebled from a very high level. All countries with a share of 30 per cent and more belong to the group of Nordic countries. On the other side of the spectrum - the countries with the lowest employment shares - we find Switzerland (12.0 per cent), the Netherlands (12.8 per cent) and Luxembourg (10.9 per cent) within the group of developed industrialized countries. These countries have, in addition, other common traits. They belong to the group of countries which are known for their low "stateness", id est, the central government has rather few competences, and liberalism has a strong position (Badie/Birnbaum 1983; Heper 1987). Another group of countries with a lower degree of economic development - the European peripheries, namely Ireland (14.0 per cent), Portugal (13.6 per cent), and Spain (15.1 per cent) have remarkably smaller employment ratios in general government employment. A historical description of the direction of trends and differences in the levels of the overall employment in general government shows that in all OECD countries the overall employment in the post-World War II period went up until it reached an upper limit and meanwhile goes down or stagnates. At the end of the 1980s, following the example of the United Kingdom, several countries started to reduce public employment. From 1989 onwards the growth rates were negative in the following countries: the United Kingdom -6.1, Denmark -0.4, Finland -1.2, Sweden -2.1, the Netherlands -0.8. A zero growth rate could be found in Italy and the Federal Republic of Germany. Thus, the employment figures were reduced especially in those countries that have the highest levels of general government employment - with the exception of the United Kingdom.
The developments in Eastern and Southeastern European transition countries differ from developments in West European countries. While in Western Europe a trend towards stagnation predominates, a strong increase in public employment can be observed in Eastern Europe. In Romania, for instance, public employment rose from 724,270 in 1988 to 899,022 in 1991, a rise of 24 per cent (ILO 1993: 12).
As OECD figures based on national accounts do not show the extent of total public sector employment, one should use an alternative source for obtaining public employment figures. On the level of the European Union the EU Labour Force Survey (LFS) is a highly useful instrument for employment questions. But the LFS has the disadvantage not to supply appropriate public sector employment figures, at least not from the printed sources.
There are two possibilities: (1) One way to get figures is to quantify public sector employment in a definition which includes the public sector as a whole, that means, it also includes private sector social services activities. In principle, the data allow a description of the levels of the individual countries, of global trends and convergence resp. divergence processes. The pattern does not match in every respect the one received by the OECD general government figures. Here, Denmark ranks highest as a Scandinavian country, the Netherlands take the second place, which is surprising, because general government employment is low in the Netherlands. One explanation could be that private services are much more important than public services in the Netherlands. Belgium's figures are higher than France's in this respect, and the United Kingdom's lower than France's. The Netherlands and Italy appear once more in the midfield. Ireland and the Mediterranean countries Portugal, Spain and Greece have the lowest shares (in descending order). In relative terms, the individual countries have shares ranging from about 15 per cent to 35 per cent. In diachronous development there seems to be convergence to some extent, as the most developed countries have reached their upper limits and partly have declining shares, whereas the less developed countries, especially Greece, have overproportionate growth rates. In the Mediterranean countries and in Ireland the large, but declining primary sector still exerts its influence on these figures.
(2) Another possibility is to take the data for public administration in a narrow sense. If one therefore looks at employment in public administration only on the basis of the EU Labour Force Survey, a different ranking of countries emerges. Here Denmark, the United Kingdom and the Netherlands have very low proportions. As these figures do not include public and private social and other services, one could assume that these services are very important in Denmark, the United Kingdom and the Netherlands, and that public administration (including defence and compulsory social security) is generally less important. Most of the other countries are rather congruent cases, with Belgium and France having high figures in administration and public services, and the Mediterranean countries and Ireland again having low figures according to both calculation methods. Figure 2 presents public sector employment in the five European countries of Belgium, France, Germany, Sweden and the United Kingdom. The data used are national data and therefore subject to national definitions. With the exception of Germany, the data refer grosso modo to public sector employment, while for Germany only data on the public service are available. As we can see, public employment, starting from different levels, expanded in all these European countries until the 1980s. Governments tried to cut back public employment - also to varying degrees since the late 1980s.
Structure of employment in the public sector
After having looked into the development of public employment over time with different indicators, I will now analyze the structure of public employment. In a comparative attempt, unfortunately, it is only possible to compare some few structural features of the administrative systems. The structure of public employment can be defined as the division of the publicly employed by sex, duration of work, professional status and career group. Comparisons can only be made here with respect to sex and duration of work. A comparison of the functional division of public employment, as done by Richard Rose et al. (1985) is not yet possible with international data. But female employment and part-time employment are two important indicators for developments in public employment and shed some light on changes in government functions, especially the growth of social services in education and health. Thus, the following sections will describe the feminization of public employment and the increase in part-time work in public employment.
Feminization: Growing share of women in public sector employment
Growing female work participation in the whole economy is a feature common to all European countries. These developments are well-documented by the annual reports of the "Employment Observatory" of the European Union (European Commission 1994). In most European countries the overall activity rate of women ranges from 40 per cent to 50 per cent, but it does not exceed 50 per cent in any country. As in the economy as a whole the share of women in public sector employment is constantly growing throughout Europe. Government and public services have come to be the most important employers for women in the last decades.
The differences regarding the overall female employment share in the public sector are tremendous. In many Western European countries, the absolute employment figures in the public sector are meanwhile going down in favour of absolute employment increases for women. This is the case with the Netherlands, Sweden, New Zealand, and more or less the US (ILO 1993: 12).
The question arises, how many (in relative terms) of all women in employment work in public administration and other services. This indicator also informs us about welfare state development or the development of social services in general. According to this figure, the importance of government and social service employment varies to a high degree within the European Union and has reached the upper limit in many countries, as the low growth rates show. In the case of Denmark and the Netherlands, over 50 per cent of all women employed work in these sectors. In Greece, this figure is extremely low, with only one quarter of all employed women being employed in those two sectors. France and Belgium have values of around 40 per cent. In most countries it varies between 35 and 40 per cent. The share is smaller in the Mediterranean countries and in Ireland. Another possibility for measuring female employment in the public sector is to recur to national statistics where available. It is important to note that national public sector statistics with a detailed socio-structural differentiation of categories are rather rare. Those countries for which data have been available are presented in Figure 3. This figure shows the proportion of women employed in the public sector according to national definitions and published results. The interpretation has to be given on the basis of national definitions. Developments over time are more reliable than differences between countries. Principally, the data show the importance of female public sector employment in total female employment. In Sweden half of all employed women have public sector jobs. After a steep rise in the 1970s and a slowdown in the early 1980s this high proportion was reached by the end of the 1980s, and it has been stagnating since then. In the other countries (France, Belgium, Germany, United Kingdom) an increase in female work participation occurred in the 1970s, and a stagnation in the 1980s. The only exception within this group of five countries is the United Kingdom where female work participation has declined since 1985. Given the higher overall employment rate of women in France compared with Belgium, it is interesting to see that public sector employment of women is obviously more important in Belgium than in France. In the United Kingdom female labour force participation in general is rather high and higher than in Belgium. Thus, the drop in public sector female employment below the Belgian level suggests that a shift from the public to the private sphere has occurred. In Germany, only roughly 15 per cent of all women in employment work in the public services, which is a narrow definition.
Figure 4 shows that if the proportion of women in public sector employment, based on national sources, is measured, it becomes clear that feminization is highest in Sweden with over 70 per cent in 1995, followed by the United Kingdom and France with roughly 60 per cent, and Belgium and Germany with roughly 45 per cent in the early 90s. The nearly linear trend of this indicator in every one of the five countries since the 60s is most impressive, while the levels of the individual countries remain stable. Thus, there is clear evidence of an ongoing feminization of the public sector. In most countries there are no signs - not even in Sweden - that an upper limit has been reached.
The pattern changes once more if one looks at public administration alone, according to the EU Labour Force Survey. Once again a change in the ranking order takes place. France and Belgium now have the highest shares, the Netherlands and the United Kingdom have rather small ones.
The alternative indicator (based on the EU LFS) measuring the feminization of employment in public administration and other services in terms of the proportion of women in these two sectors answers the question to what degree women predominate public sector employment. With over 70 per cent feminization is highest in Sweden and Finland; with nearly 70 per cent it is still high in Denmark and the United Kingdom. Surprisingly, Portugal also has a rather high proportion with 65 per cent, probably a consequence of its overall high female employment ratio. Most continental and Mediterranean countries have proportions around 55 per cent. The female employment rate is low in Italy, Luxembourg and Greece. But in nearly all EU countries women are now in the majority in these two sectors.
The feminization of public administration alone is much lower, partly because the male-dominated defence sector exerts its influence. Only in Denmark has this share reached the 50 per cent level. The development over time reveals that there is convergence to some degree, because some countries have reached their upper limits, while others are catching up a little bit. The countries with the highest feminization ratios are the Nordic countries, France and the United Kingdom. Again, the Netherlands have a very low rate in this respect.
Segregation: Male employment in public administration and other services
If one looks at the sexual division of public employment, one should not forget male employment. The tertiarization of the economy with a declining industrial workforce should lead to a growing number of men working in the service sector. Is this also true for the public sector? According to EU Labour Force Survey data, in the 1980s the shares in these two sectors increased also for men. Some results are surprising. In Belgium, the Netherlands and Italy nearly every fourth man works in these sectors, in Italy a steep increase occurred in the 1980s. Most continental countries and the United Kingdom are in the midfield with 15 per cent to 20 per cent of total male employment. The Mediterranean countries and Ireland have the smallest proportion of men in these sectors.
If one looks (according to the EU LFS) at public administration alone, only 5 to 12 per cent of all men work in this sector in EU countries. As defence is included in these figures, the variation is presumably heavily influenced by the size of the military forces. Belgium and Germany have the largest share in this respect. Denmark has one of the smallest shares. A declining trend can be observed in several countries (Germany, Belgium) and an increase in others (Greece, Spain).Whereas the public sector becomes increasingly important regarding the occupational opportunities of women, public sector employment is becoming less important for men. This can be seen in Figure 5 which is based on national sources. In all five countries the share of publicly employed men in total male employment increased until the mid-1980s and subsequently declined partly dramatically. In Sweden, high female employment in the public sector does not coincide with high male employment in the public sector. According to sector of employment job segregation seems to be high there. Male employment in the public sector was very high in the United Kingdom, but lost 10 percentage points. The Belgian male public sector employment figure is still very high, but strongly declining, too. The French male public sector employment figure is declining to a small degree, but the decline is stronger in Germany. Most impressive is the declining share of males in Sweden and the United Kingdom.
Replaced by what? Growth, stagnation and decline of public employment
Different developments in female and male public employment, stagnating employment for women, and declining employment for men, result in a overall decline of public employment. According to Figure 5 the developmental paths of all countries show one similar pattern: growth, consolidation and decline. Due to different traditions and structures, the levels of the individual countries are very different. The figure is very similar to the one known from diffusion theory or from the literature on growth processes in general, where one "product" experiences mostly a "logistic" growth process and afterwards a decline due to it being replaced by other products. In this case the product would be "public goods". The question is what could be the substitutes? The processes which are responsible for the substitution of private employment through public employment are processes labeled "privatization", "decentralization", "slim state", "efficiency", "competition", etc. The question which could be discussed is how far the public sector is able to retreat from the production of "public goods", and to what extent "public goods" can be produced on a private basis. The second subject for discussion would be to what extent "external" processes can be considered to be responsible for a reduction of public services. One of these processes is the end of the cold war, the opening and reshaping of frontiers, which reduces the necessity of defence. As a consequence of these developments the military personnel has been reduced nearly everywhere in Europe. The third topic for a discussion are the consequences of European integration. The ongoing integration process tends to weaken national responsibilities and to shift responsibilities to higher levels. It therefore reduces the demand for national and "nationalized" services as, e.g., the national postal services, the national railways, etc.
Increasing part-time work in public sector employment
Relative decline in number of "non titulaires"
In most European countries public employees are grouped in different status categories. Civil servants in the sense of permanent civil servants ("fonctionnaires", "Berufsbeamte") are a minority in several countries, at least in the United Kingdom, where civil servants account for only 10 per cent of all public employees, and in Germany, where civil servants ("Beamte") have to be distinguished from employees ("Angestellte") and workers ("Arbeiter") in the public sector. The small nucleus of civil servants in Germany conducts sovereign tasks ("Hoheitsaufgaben"), is subject to public law and is permanently employed. The employees and workers in the public sector are not employed on a permanent basis (de jure) and are subject to private law. Besides these three main categories, in Germany there are also civil servants and public employees who are on probation or are employed temporarily or for specific tasks only. In France most public servants are employed on a permanent basis and subject to the civil service code, but there exists a group of non titulaires who are employed temporarily or for specific tasks.
A trend which can be found in several European countries is the relative reduction of "non titulaires". Titularisation means the transformation of temporary employment contracts into permanent civil servant positions. This procedure is common especially in France and Italy. In the French system only fonctionnaires, ouvriers détat and praticiens hospitaliers statutaires exist. Non titulaires are those employees who do not fit in these groups, that is, especially persons who are employed for limited time periods or have part-time jobs; therefore they are not intended to be given the status of "fonctionnaires". In France the number of non titulaires did not change significantly between 1969 and 1989: 864,000 in 1969 and 877,000 in 1989. As the number of total employees in the public sector rose steeply, the relative share of non titulaires dropped from 28.4 per cent to 17.9 per cent in the same time period. In the French public sector the number of non titulaires varies greatly. In the hospital sector the non-medical staff normally does not belong to the non titulaires (5 per cent). Physicians practising at hospitals normally are non titulaires, because, as a rule, they have their own practices and are therefore in principle self-employed. There have been several plans in the ministries to reduce the number of non titulaires. In 1969 456,000 non titulaires were employed in the ministries, in 1982 the number was highest with 481,000 employees. By 1989 the number of non titulaires had been reduced to 386,000. The composition of non titulaires has changed fundamentally in this respect. The number of part-time employees in the group of non titulaires has grown overproportionately. Meanwhile there is one part-time non titulaire for each full-time non titulaire. In the field of collectivités locales the number of non titulaires is by far the highest. The recruitment of non titulaires increased in the 80s with ups and downs in absolute terms, accompanied by a relative decline due to the even stronger increase in positions for fonctionnaires. With 380,000 non titulaires by the end of 1989 the fonction publique territoriale had a share of employees outside the civil service code of over 30 per cent (Quarré/INSEE 1992: 46f).
From a comparative perspective it is difficult to find out where changes from temporary employment into civil service employment took place due to the heterogeneity of the systems. Processes of titularisation can only be observed in those administrative systems which are similar to the French one. In other systems as, e.g., the German system, there is a clear demarcation line between civil servants (Beamte), public employees (Angestellte) and public workers (Arbeiter). To change a position planned for a public employee into a civil servant position is only possible through political decisions. Titularisations become interesting with respect to the functioning of the political system when they are used to reward the clientel of the winner of the elections and to supply them with civil servant positions. Non titulaires can therefore be regarded as a potential group for the recruitment of civil servants. In France (Quarré/INSEE 1992: 47), Spain (Martin-Retortillo Baquer 1992) and Greece (Spanou 1992) civil servants have been recruited in the group of non titulaires.
Increase in number of highly qualified employees
Another trend is the permanent increase in qualification levels. Nearly every system of public administration is structured in such a way that a position in the administrative hierarchy is linked to the achieved educational level. The expansion of the educational system in general and the fast integration of women into the educational system leads to a rise in the number of higher educational degrees and thus to an oversupply of highly-qualified persons. This, in turn, affects the recruitment methods, i.e., an increasing number of positions are assigned to persons with higher educational degrees. In the final analysis this can be interpreted as a market imbalance resulting from the oversupply of candidates for only a small number of positions; thus, those with higher grades get the jobs. This in turn circularly affects the requirements for higher positions. Thus it can be said that ceteris paribus this has important consequences for pay and pensions.
In general, in Germany as well as in France, a relative growth of upper career groups can be observed, that is, the higher service and the upper service. This is the case with civil servants as well as with public employees. The higher service has nearly doubled its share since 1960, while the upper service has grown only little, while the middle and lower services have declined. The structure of career groups in the institutional parts of the public sector has remained the same. The higher service is strongly represented in state government, probably because of the teachers, who are employed by the states (Länder). The federal government (Bund) employs considerably fewer persons in the higher service, and the communes even fewer. It is important to look at the absolute numbers in this respect. In 1994, the federation employed 198,000 civil servants/judges and public employees, the states 1,400,000, the communes 726,000, the communal associations 30,000, the Federal Railways (Deutsche Bundesbahn) 121,000 and the Federal Post (Deutsche Bundespost) 304,000. The central government is therefore rather small and accounts only for one sixth of all state employees. Thus, the communes employ half of all state employees. The centre of gravitation of the German administrative system is therefore the state government where, in addition, the labour intensive fields of education and health are located.
Dr. Franz Rothenbacher
Franz Rothenbacher is a sociologist at the EURODATA Research Archive at the Mannheim Centre for European Social Research (MZES) and managing editor of this Newsletter