Public Sector And Private Sector Analysis

Wage rate differential between public sector and private sector

Wage Differential

Difference in earnings of labor according to their skill in same industry or between different industries (Collins English dictionary)

INTRODUCTION

Public sector workers earning is a vital region of experimental study in both developed and developing nations. Public sector earning affects the fiscal policy in developed nations. Untimely effort evaluates the wages of public sector workers in the US were occupied by Smith in 1976-77. She discovers that rate of income were high for public sector worker than in private sector and salary premium were big in favour of female than male public sector workers.

In most of the developing countries, like Pakistan the

The government continued to play a large economic role in this period, with public sector enterprises accounting for a significant portion of large scale manufacturing.

In 1991, it was estimated that such enterprises produced about 40 percent of national industrial output. As of early 1994, proposals to end state monopolies in selected industries were in various stages of implementation. Private investment no longer required government authorization, except in sensitive industries. In early 1994, the government announced its intention to continue policies of both deregulation and liberalisation. The rise in the share of the private sector reflected the policy shift towards a market based economy as well as the government fiscal position.

In spite of the re-orientation of the economy towards the private sector in recent years, the competition for employment in the public sector remains keen in Pakistan. Public sector employment in Pakistan is still viewed as more attractive because of better pay, better working conditions and the availability of other fringe benefits ( e.g., pension rights and free medical

The employees who have higher education are getting more income as compare to those who are not much educated. It shows that the education has a great influence on the income level. The most of the employees are not satisfy with their income level but the teachers who have higher education ( M .Phil, PhD level ) are satisfied with their income.

The public sector is not a profit maximizing agent and its wages are not determined by the forces driving the labour market as happens in the private sector. Besides, the public sector is subject to political influences, which could lead the government to pay wages higher than those paid to similar workers in the private sector. It is because this lack of information provided by the market that the public sector applies the prevailing wage principle that states; similar workers performing similar jobs, should be paid similar wages, regardless the sector of