Wages in African public administrations: Where do we stand?

Delautre, Guillaume; de Lazzari, Giulia; Rinaldi, Gustavo Working Paper Wages in African public administrations: Where do we stand? ILO Working Paper, No. 134 Provided in Cooperation with: International Labour Organization (ILO), Geneva Suggested Citation: Delautre, Guillaume; de Lazzari, Giulia; Rinaldi, Gustavo (2025) : Wages in African public administrations: Where do we stand?, ILO Working Paper, No. 134, ISBN 978-92-2-041704-1, International Labour Organization (ILO), Geneva, https://doi.org/10.54394/OJAG0131 This Version is available at: https://hdl.handle.net/10419/312866 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ XWages in African public administrations: Where do we stand? Authors / Guillaume Delautre, Giulia De Lazzari , Gustavo Rinaldi January / 2025 ILO Working Paper 134 Copyright © International Labour Organization 2025 This is an open access work distributed under the Creative Commons Attribution 4.0 International License (https://creativecommons.org/licenses/by/4.0/). Users can reuse, share, adapt and build upon the original work, as detailed in the License. The ILO must be clearly credited as the owner of the original work. The use of the emblem of the ILO is not permitted in connection with users’ work. Attribution – The work must be cited as follows: Delautre, G., De Lazzari , G., Rinaldi, G. Wages in African public administrations: Where do we stand? . ILO Working Paper 134. Geneva: International Labour Office, 2025. Translations – In case of a translation of this work, the following disclaimer must be added along with the attribution: This translation was not created by the International Labour Organization (ILO) and should not be considered an official ILO translation. The ILO is not responsible for the content or accuracy of this translation. Adaptations – In case of an adaptation of this work, the following disclaimer must be added along with the attribution: This is an adaptation of an original work by the International Labour Organization (ILO). Responsibility for the views and opinions expressed in the adaptation rests solely with the author or authors of the adaptation and are not endorsed by the ILO. This CC license does not apply to non-ILO copyright materials included in this publication. If the material is attributed to a third party, the user of such material is solely responsible for clearing the rights with the right holder. Any dispute arising under this license that cannot be settled amicably shall be referred to arbitration in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL). The parties shall be bound by any arbitration award rendered as a result of such arbitration as the final adjudication of such a dispute. All queries on rights and licensing should be addressed to the ILO Publishing Unit (Rights and Licensing), 1211 Geneva 22, Switzerland, or by email to [email protected]g. ISBN 9789220417034 (print), ISBN 9789220417041 (web PDF), ISBN 9789220417058 (epub), ISBN 9789220417065 (html). ISSN 2708-3438 (print), ISSN 2708-3446 (digital) https://doi.org/10.54394/OJAG0131 The designations employed in ILO publications, which are in conformity with United Nations practice, and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the ILO concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers. The responsibility for opinions expressed in signed articles, studies and other contributions rests solely with their authors, and publication does not constitute an endorsement by the ILO of the opinions expressed in them. Reference to names of firms and commercial products and processes does not imply their endorsement by the ILO, and any failure to mention a particular firm, commercial product or process is not a sign of disapproval. Information on ILO publications and digital products can be found at: www.ilo.org/researchand-publications ILO Working Papers summarize the results of ILO research in progress, and seek to stimulate discussion of a range of issues related to the world of work. Comments on this ILO Working Paper are welcome and can be sent to [email protected]g. Authorization for publication: Marcadent, Philippe ILO Working Papers can be found at: www.ilo.org/global/publications/working-papers Suggested citation: Delautre, G., De Lazzari , G., Rinaldi, G. 2025. Wages in African public administrations: Where do we stand? , ILO Working Paper 134 (Geneva, ILO). https://doi.org/10.54394/OJAG0131 01 ILO Working Paper 134 Abstract By playing a key role in the provision of critical services, such as health, education or security, governments are crucial for the good functioning of societies and social justice. Governments have a dual role to play as employers and as the actor responsible for the good management of the economy. This document aims to provide a synthetic picture of the situation of the wages of African public administration employees, based on the latest data available, and to discuss some of the current challenges for public-sector wage policies in Africa. About the authors Guillaume Delautre (MSc in Economics) joined the ILO in 2015 and was Technical Specialist on wages and social dialogue at the ILO Country Office in Cairo, Egypt, when this study was undertaken. In October 2024, he returned to headquarters at Geneva as a manager for the project “Setting adequate wages: Agriculture”. He previously worked for the ILO’s Department of Research (RESEARCH) and its Department of Employment Policy, Job Creation and Livelihoods (EMPLOYMENT), and started his career in the French public administration. Giulia De Lazzari (PhD in Economics and Finance) joined the ILO in Geneva in 2022 as an Economist in the Wage Team of the Inclusive Labour Markets, Labour Relations and Working Conditions Branch (INWORK). She specializes in providing technical assistance to ILO constituents on matters related to wages and minimum wages. She is among the authors of the Global Wage Report, the ILO flagship publication on wages issued every two years. She previously worked as a Statistician from 2018 to 2022 for the International Civil Service Commission of the United Nations in New York. Gustavo Rinaldi (PhD in Economics) is Contract Professor of Economics at the University of Turin and an ILO consultant. He has published on microeconomics, the informal economy, business resilience and the economics of alcohol, and is the author of Economics for Policy Makers: A Guide for Non-Economists (Routledge and ITCILO, 2019). 02 ILO Working Paper 134 Abstract 01 About the authors 01 Executive Summary 05 XIntroduction 07 X1 Employment and wages in African public administrations 08 How are wages and employment regulated in African public administrations? 08 The State is one of the main employers in African countries 09 African public employees receive higher wages than other wage-earners 12 Public wages are also less unequal 13 Explaining wage premiums in public administrations 17 X2 The challenges of African public administrations and their implications for public wage policies 22 Many African countries are facing important public budget constraints 22 Lack of evidence concerning the impact of performance-related pay in African public administrations 25 XConclusion 27 Annex 29 References 31 Acknowledgements 34 Table of contents 03 ILO Working Paper 134 List of Figures Figure 1 - Share of workers employed in public administration in total employment, by gender (latest year available) 10 Figure 2 - Share of employees in public administration in all wage workers, by gender, in % 11 Figure 3 - Public administration employees as a share of formal wage employment, in % 11 Figure 4 - Average number of hours worked in a week by full-time public administration employees and wage workers employed elsewhere 12 Figure 5 - Percentage difference in hourly wage between public administration and all other employees 13 Figure 6 – D1/D9 ratio for public administration and private-sector employees 14 Figure 7 - Percentage difference in hourly wages of men and women in public administration and the private sector (gender wage gap) 16 Figure 8 - Level of education, by sector: Senegal, Burkina Faso, Namibia; Egypt, Malawi, Democratic Republic of the Congo 18 Figure 9 - Gross central government debt, 2000–2024 (aggregate share of GDP, percentage) 23 Figure 10 – Public expenditure on public-sector compensation as a percentage of GDP (lefthand graph) and total public expenditure (right-hand graph) 24 Figure 4 bis - Standard deviation of the number of hours worked in a week, by full-time public administration employees and wage workers employed elsewhere 30 Figure 5 bis - Percentage difference in hourly median wage between public administration employees and all other employees 30 04 ILO Working Paper 134 List of Tables Table 1 - Ratifications of Convention No. 151 by African countries 09 Table 2 - Wage inequality among public administration employees versus wage inequality among workers employed elsewhere 15 Table 3 - Percentage difference in hourly wages of employees in the public and private sectors, by gender 20 Table 4 - Percentage difference in hourly wages of employees in the public and private sectors, by gender, considering only formal employment 21 Table 1 bis –Year of collection of labour force survey in each country 29 05 ILO Working Paper 134 Executive Summary This paper provides a synthetic picture of the situation of African public administration employees, based on a selected number of countries, and discusses some of the challenges that are currently influencing public-sector employment and wages. Wage-setting practices in the public administration vary across countries, but civil servants are generally excluded, in whole or in part, from universal labour legislation. Also, wages and employment in the public sector are driven by different factors than those in the private sector, as the State faces different constraints in providing them. It must recruit and retain motivated and competent public-sector employees in a situation in which the demands for public interventions are evolving, while keeping the level of public expenditure sustainable and not imposing additional distortions on the functioning of the economy. Historically, two main types of grading systems can be found in Africa and were inherited from the former colonial powers: a more position-based system, in which individuals apply directly to specific positions (usually open to both internal and external candidates); and a career-based system, in which competition tends to happen earlier in the career and most positions are only open to civil servants organized in professions. However, in both systems, with some nuances, jobs are grouped into grades based on job requirements, education or other mandatory qualifications. As in other developing economies, the public sector in Africa is often the largest employer and the dominant source of formal wage employment. In most countries for which data ais available, the proportion of public administration employees in total wage employment is above 20 per cent. There are very large variations from country to country, however, which reflect certain differences in the conception of the role of the State, the level of development and the fiscal capacity. In line with previous studies, this report highlights that African public-sector employees generally receive higher wages than other wage-earners. The size of the premium, however, varies considerably from one country to another. Public-sector wages also tend to have a more homogeneous distribution than private-sector wages, although the spread may be very variable from country to country, especially due to higher inequalities in the upper tail of the wage distribution. Once controlled by the labour market and individual characteristics, the premium between the public and private sectors tends to decrease but remains significant in most countries. However, interestingly, if the analysis is restricted to formal employment only, the wage premium for public administration employees is once again reduced and even becomes negative in certain countries. In recent decades, African civil services have faced a number of series of public-sector reforms that have influenced wage-setting. Those reforms have mainly aimed to ensure better control of public expenditures and some of them have also aimed to better reward the performance and quality of services. In many countries, the public-sector wage bill already represents a substantial share of the government’s expenditure. In the context of increasing indebtedness, the public-sector wage bill is particularly scrutinized by international donors. Also, conditions on public-sector reforms have often been attached to loans in the past. Experience shows, however, that in order to be effective over the long term, those reforms must be structural, consensus-based and carried out in expansionary periods (IMF 2023a). Given the increasing and ever more complex demand for state intervention in emerging economies and least developed countries, it is of prime importance that African governments improve their capacities in terms of fiscal planning, employment and skills 12 ILO Working Paper 134 African public employees receive higher wages than other wage-earners Having investigated the prevalence of public-sector employment, this section analyses the wages of public administration employees in Africa and more specifically investigates whether systematic wage gaps exist between them and private-sector employees.5 The variable used to measure earnings is the hourly wage, which is calculated by first transforming monthly earnings into weekly earnings and then dividing by the number of hours worked in the previous week, as reported by the respondent. Monthly earnings are derived from self-reported figures. Using hourly wages rather than monthly wages has the advantage of removing any earnings differential that is due to the potentially different number of hours worked by individuals in the private and public sectors. This is an a factor worth considering because, as shown in figure 4, which reports the average number of hours worked by full-time wage workers employed in public administration and elsewhere, public-sector employees work fewer hours a week in all countries considered. The analysis also indicates that not only do workers employed in public administration work fewer hours on average than workers employed elsewhere but also their working hours tend to be more evenly distributed than in the private sector, as indicated by the lower standard deviation in the number of hours worked depicted in figure 4bis in the (see appendix, figure 4bis). XFigure 4 - Average number of hours worked in a week by full-time public administration employees and wage workers employed elsewhere Source: ILO estimates For each of the countries analysed, figure 5 reports the average hourly earnings differentials between employees in the public and private sectors, expressed as the proportion by which the average wage of public-sector employees surpasses the average wage of private-sector employees. A positive number indicates higher earnings for employees in the public sector, while a negative 5For this comparison, only employees in the private sector are considered and own-account and family workers are not included. 13 ILO Working Paper 134 figure indicates higher earnings for employees in the private sector. In all but one African country, the Democratic Republic of the Congo, public administration employees are paid hourly rates that are on average above those paid in the private sector. The country with the highest wage premium is Senegal, where the average hourly salary of a public administration employee is almost three times that of a private-sector employee, while the country with the lowest premium is Malawi, where they earn an hourly salary that is on average 34 per cent higher than that of their private-sector counterparts. In the Democratic Republic of the Congo, the only country analysed with an earnings differential that favours the private sector, public administration employees earn an hourly wage that is on average only 85 per cent of what is paid in the private sector. Figure 5 also reports the earnings differential between the public and private sectors separately by gender. In 16 of 22 countries, it is larger for women than for men. It is notable that for women, employment in the public sector is always associated with a higher wage premium. The larger relative premium enjoyed by women in the public sector compared to men may be driven by higher salaries for women in public positions or by relatively lower salaries for women in the private sector, or by a combination of the two. While the evidence of lower wages for women in the private sector is a well-documented phenomenon in the literature that is commonly referred to as the “gender pay gap”, evidence in support of higher wages for women in the public sector is less clear. XFigure 5 - Percentage difference in hourly wage between public administration and all other employees Source: ILO estimates Public wages are also less unequal When comparing the median wages of public-sector and private-sector employees instead of their average wages, the results are similar, but the wage premium associated with public administration employment is in almost all cases larger (see appendix, figure 5bis). This is an indication 14 ILO Working Paper 134 that the average wage of private-sector employees tends to be affected by outliers more than the average wage of public-sector employees, which suggests an overall wage distribution that is less equally distributed among the latter than the former. Figure 6, which reports for each of the countries analysed the D9/D1 ratio in public administration and the private sector, supports this hypothesis. The D9/D1 ratio is a measure of inequality that is calculated by taking the ratio between the threshold value that marks the upper end of the ninth decile and the threshold value that marks the upper end of the first decile. The higher the figure, the higher the level of inequality in the distribution. from figure 6, it is evident that in a large majority of countries, the orange marks, which represent inequalities in the private sector, are larger than the blue bars, indicating a more homogeneous distribution of wages among public administration employees. Interestingly, it also seems that the D9/D1 ratio among public administration employees is very variable from one country to another. In Egypt, it is below 3, meaning that the ninth decile is paid on average three times the salary of the first decile, while in Botswana this ratio is much more unequal, at about18. XFigure 6 – D1/D9 ratio for public administration and private-sector employees Source: ILO estimates Table 2 looks at some additional aspects of the distribution of wages of the two populations considered, in particular whether the wages of employees in public administration are more or less dispersed than those of private-sector employees. In addition to the D9/D1 ratio already reported in figure 6, table 2 applies two additional measures to further investigate whether the dispersion is more pronounced at the upper or lower end of the wage distribution, the D5/D1 and the D9/ D5. These indicators measure the ratio between the median wage and that of the bottom decile and the ratio between the wage of the top decile and that of the median wage, respectively. In all cases in which wages are more dispersed among public administration employees (highlighted in bold in table 2), this is due to inequalities in the upper tail of the wage distribution (as measured by the D9/D5 ratio), meaning that the higher dispersion is driven by higher wages 15 ILO Working Paper 134 among top earners in the public administration rather than lower wages for the bottom earners. On the contrary, when wages are more dispersed in the private sector, this is driven by high levels of inequality in the bottom half of the wage distribution of employees in the private sector (as indicated by the values of the D5/D1 ratio, which are usually above the corresponding values for the public sector and above the values of the D9/D5 measure for both the public and private sectors). When we look at the D5/D1 ratio, we may observe that the dispersion of wages among public administration employees is in all cases lower or very close to the dispersion of wages among private-sector employees. This indicates that wages in the bottom deciles are closer to the median wage in public administration than for employees working elsewhere. XTable 2 - Wage inequality among public administration employees versus wage inequality among workers employed elsewhere D9/D1 D5/D1 D9/D5 Public Private Public Private Public Private Angola 8.29 12.48 2.16 4.99 3.83 2.50 Botswana 17.86 13.23 2.50 6.67 7.14 1.98 Burkina Faso 8.56 11.09 2.19 3.97 3.90 2.80 Cameroon 10.54 8.96 3.06 3.14 3.44 2.86 Chad 8.67 15.23 2.74 4.18 3.16 3.64 Côte d'Ivoire 7.47 10.50 2.77 3.85 2.70 2.73 Democratic Republic of the Congo 7.83 14.52 2.75 4.00 2.85 3.63 Egypt 2.82 3.05 1.83 1.83 1.54 1.67 Eswatini 8.51 13.12 1.77 5.55 4.80 2.36 Ethiopia 6.67 11.75 2.31 3.46 2.89 3.39 Ghana 11.67 16.67 3.26 4.95 3.58 3.37 Guinea-Bissau 7.40 6.05 2.98 2.82 2.48 2.15 Kenya 5.15 9.12 2.09 4.17 2.46 2.19 Madagascar 11.25 9.95 2.97 2.65 3.79 3.76 Malawi 6.46 20.87 2.10 4.59 3.08 4.55 Mali 4.20 10.83 1.83 2.59 2.30 4.19 Namibia 7.14 22.04 2.43 6.40 2.94 3.44 Nigeria 10.61 14.00 3.73 4.67 2.84 3.00 Congo 3.44 5.20 1.88 2.35 1.84 2.21 Senegal 7.06 6.35 2.03 2.67 3.47 2.38 United Republic of Tanzania 9.32 20.53 3.00 5.50 3.11 3.73 Zambia 5.64 11.59 2.01 4.17 2.81 2.78 Source: ILO estimates Figure 7 looks at the gender pay gap, that is, the percentage difference in the salaries of men and women in the public and private sectors. A negative number indicates higher salaries for women, while a positive number indicates higher salaries for men. In 13 of the 22 countries considered, the salaries of men employed in public administration are higher than their female counterparts, 16 ILO Working Paper 134 while in the remaining 9 countries the opposite is true. Moreover, when the gender pay gap favours men, the difference in salary tends to be larger. The gender pay gap is therefore also a problem that affects public administration. However, as expected, the gender wage gap tends to be larger in the private sector and the wage differential favours men in most cases. The few cases of negative gender pay gaps may be due to composition effects, which happen, for example, when highly educated women are overrepresented. XFigure 7 - Percentage difference in hourly wages of men and women in public administration and the private sector (gender wage gap) Source: ILO estimates The analysis indicates that when the wage premium associated with employment in the public sector is higher for women than for men (see figure 5), this is driven by poor wage outcomes for women in private-sector employment compared to men rather than by markedly higher wages for women in the public sector. For instance, the larger premium associated with public-sector employment for women in Zambia derives from the fact that the hourly wage in public administration is 30.5 ZMW compared to the 12.1 ZMW paid in the private sector. Although men earn a smaller public administration premium, wage levels for men are above those for women (36.9 ZMW and 20.8 ZMW, respectively) in both public administration and the private sector. Countries in which the public administration wage premium is larger for men than for women tend to have positive and relatively significant gender pay gaps in the private sector as well. This short paper and the data available do not allow us to consider the details of public wage dynamics over the medium or long terms. However, it should be remembered that many African countries have experienced a surge in inflation to levels unseen in decades due to the consequences of the coronavirus disease (COVID-19) pandemic and subsequently the Russian Federation's aggression against Ukraine. Based on the IMF’s assessment, inflation in Africa stood at 18.2 per cent in 2023, up from 14.2 per cent in 2022 (IMF 2024). In our sample of countries, Angola, Malawi, 17 ILO Working Paper 134 Ethiopia and Ghana experienced inflation rates in excess of 20 per cent in 2022. Even if the situation started to improve in a number of countries in 2023, several countries still experienced another increase in their consumer price index, such as Egypt (24.4 per cent), Nigeria (33.9 per cent), Malawi (30.3 per cent) and Ghana (37.5 per cent). This is a major issue for wage policies. High inflation in the 1970s and 1980s severely eroded the real value of public-sector salaries. Indeed, to cope with their financial obligations, the nominal adjustments made by governments often did not match inflation rates. The highest-skilled employees tended to experience the sharpest decline in real wages, as most governments took measures to protect low-paid employees. Overall, this erosion in real wages led to many negative outcomes in terms of reduction of efforts, absenteeism, discipline and skills shortages (Simson 2022). Explaining wage premiums in public administrations The summary statistics reported to date show only the average tendencies of salaries in the public and private sectors. No indication is given on whether higher (or lower) salaries in the public sector are justified by the different characteristics of the workforce employed or the activities performed therein. The issue of public-sector wage premiums has been widely discussed in the literature. According to most authors, the salaries in the public sector are often higher than those in the private sector and this should be even more the case in lower-income countries (Gindling et al. 2020; Finan, Olken and Panda 2015; Kerr and Wittenberg 2017; World Bank 2021; Abdallah, Coady and Jirasavetakul 2023). However, at the global level, the premium is generally higher for less-qualified workers than for the most qualified workers World Bank 2021). The evidence shows that in many countries, highly skilled workers tend to pay a penalty for working in the public sector and public wages have tended to be compressed in recent decades. Moreover, the public-sector wage premium tends to disappear when compared with formal private employees only (Gindling et al. 2020). The literature is also contradictory on the evolution of this wage premium, with some authors observing a growing trend (Kerr and Wittenberg 2017; World Bank 2021) and others seeing it as diminishing (Tansel, Keskin and Ozdemir 2020) or moving counter-cyclically (Abdallah, Coady and Jirasavetakul 2023 ), depending on the country. Beyond the issue of the public budget, the issue of the public-sector wage premium is also important because of the influence of the government on the overall functioning of the labour market. It is indeed likely to impact the reservation wage and lead to skills shortages in the private sector in certain circumstances (Abdallah, Coady and Jirasavetakul 2023). Using education as a proxy for the level of skills required to perform a job, figure 8 looks at the level of education of individuals employed in public administration and the private sector in the three countries with the highest public-sector pay premiums and the three countries with the lowest premiums (or a negative gap in the case of the Democratic Republic of the Congo). It is evident that in all six countries, employees in the public sector have a higher level of education on average, as indicated by the fact that the blue bars tend to be higher towards the right, implying higher levels of education, while the orange bars tend to cluster around lower levels of education. The graphs also suggest that the difference in the level of education between public administration and private-sector employees is more pronounced in countries in which there is a higher premium associated with working in the public sector. This is especially evident in the case of Senegal and Burkina Faso, the countries with the largest gaps, in which less than 20 per cent of employees in the private sector have education above the lower-secondary level, in stark contrast with employees in the public sector, in which the proportion exceeds 50 per cent in the case of Senegal and exceeds 40 per cent in the case of Burkina Faso. Except for Malawi, in which public administration employees display a remarkably higher level of education, the countries 18 ILO Working Paper 134 with lower (or negative) gaps are characterized by levels of education in the public and private sectors that are more similar. These findings suggest that the higher levels of salaries in the public sector may be at least partially justified by higher levels of education. XFigure 8 - Level of education, by sector: Senegal, Burkina Faso, Namibia; Egypt, Malawi, Democratic Republic of the Congo Source: ILO estimates While the average salary reported in the previous section is a convenient indicator, as it is easily interpreted and gives an idea of the mid-point in a sample, it has the disadvantage of being affected by extreme values and not giving any information about population characteristics that might justify different levels of wages. To further investigate the existence of a public administration wage premium, we ran a series of regressions that aim to verify whether differences in salaries in public administration and the private sector are statistically significant and persist after jointly considering a set of occupational and personal characteristics. For each country, the regression is specified as follows: ●male is a dummy variable, taking value 1 for male and 0 for female; ●public is our variable of interest and is a dummy that takes value 1 if an individual is employed in the public administration and 0 if they are employed elsewhere; ●part_time is a dummy variable, taking value 1 if an individual is employed part-time and 0 if they are employed full-time;6 6The threshold used to distinguish between part-time and full-time employment is 31 hours a week. 19 ILO Working Paper 134 ●formal is a dummy variable, taking value 1 if an individual has a formal job and 0 if the job is informal;7 ●hours_worked measures the actual number of hours worked in the main job during the week preceding the survey; ●age measures the age of the worker;8 ●industry includes a set of dummies that distinguish economic activities based on their International Standard Industrial Classification of All Economic Activities, Revision 4 (ISIC, Rev.4)) classification; ● occupation includes a set of dummies that identify the occupation based on the ILO’s International Standard Classification of Occupations (ISCO-08);9 ●region includes a set of dummies that record the region in which the employee works; ●education includes a set of dummies that measure the level of education, using the same four levels used in figure 8. The second column of table 3 reports the percentage difference in public-sector and private-sector wages, as estimated using the regression above, together with the level of statistical significance. A positive number indicates a wage premium in the public sector. When looking at the earnings differentials in the public and private sectors in terms of hourly wages after controlling for workers and occupational characteristics, a premium is identified in all countries except the Democratic Republic of the Congo, where employees in the public administration earn on average 10 per cent less than their private sector counterparts. The magnitude of the premium for the remaining countries varies from 82 per cent in the United Republic of Tanzania to just 3 per cent in Guinea-Bissau. Given that the summary statistics presented in figure 5 pointed to important differences in the public administration wage premium experienced by men and women, the previous regression has been estimated again, adding an interaction term between gender and public administration employment. The introduction of this interaction term allows for a different gap to be estimated for men and women. The results are reported in the third and fourth columns, which show the estimated gap for women and men, respectively. For women, a statistically significant premium associated with public administration employment is evident for all countries except Malawi and Guinea-Bissau, for which the coefficient associated with public-sector employment is positive but not statistically significant, indicating that there is no difference between the wages earned by women employed in public administration and the private sector. The extent of the wage differential for women ranges from 116 per cent in the United Republic of Tanzania to 17 per cent in Botswana. Confirming what is already indicated by summary statistics, the wage gap between public-sector and private-sector employees for men is almost invariably lower than the wage gap for women, even if the difference is not always statistically significant.10 The highest wage premium for men is in Namibia, at 66 per cent. The Democratic Republic of the Congo and Ethiopia are the only countries in which male employees in the public administration earn lower wages than their counterparts in the private sector with a level of significance reaching at least 0.05. 7The variable is not available in the case of Egypt, Nigeria and the United Republic of Tanzania and hence is not included in the regression in these countries. 8The analysis only considers working-age individuals, that is, individuals between 16 and 70. 9Six dummies are included for the categories of CEO/manager, professional, technical, semi-skilled, low-skilled and unskilled 10 The gender difference is statistically significant (at least at the 0.1 level) in Burkina Faso, Malawi, the Congo, the United Republic of Tanzania, Ethiopia, Ghana, Nigeria, Chad, the Democratic Republic of the Congo, Cameroon, Senegal and Egypt. 20 ILO Working Paper 134 XTable 3 - Percentage difference in hourly wages of employees in the public and private sectors, by gender Country Wage differential OVERALL Wage differential WOMEN Wage differential MEN United Republic of Tanzania 82% *** 116% *** 63% *** Namibia 70% *** 73% *** 66% *** Burkina Faso 69% *** 102% *** 54% *** Cameroon 54% *** 79% *** 40% *** Nigeria 54% *** 77% *** 42% *** Kenya 51% *** 55% *** 49% *** Zambia 46% *** 51% *** 43% *** Eswatini 42% *** 50% *** 36% *** Ghana 41% *** 57% *** 32% *** Senegal 41% *** 25% *** 48% *** Côte d’Ivoire 40% *** 53% *** 35% *** Chad 34% *** 84% *** 24% *** Mali 25% *** 28% *** 25% *** Congo 25% *** 18% *** 36% *** Angola 23% *** 25% *** 22% *** Madagascar 17% * 12% 22% ** Egypt 17% *** 41% *** 9% *** Botswana 14% *** 17% *** 10% * Ethiopia 5% *** 22% *** -4% ** Guinea-Bissau 3% 13% 0% Malawi -2% 8% -6% Democratic Republic of the Congo -10% *** 2% -14% *** Source: ILO estimates Note: The percentage difference refers to the estimates obtained in the regression specified in the previous paragraph. More specifically: *** indicates an estimate that is significant at the 0.01 level, ** indicates an estimate that is significant at the 0.05 level and * indicates an estimate that is significant at the 0.1* level. Although the regression analysis confirms the existence in most African countries of a wage premium for public administration employees that cannot be explained by individual or occupational characteristics, the magnitude of those premiums is smaller than what is indicated by the simple averages reported in figure 5. This indicates that the differences among public-sector and private-sector employees, in particular higher educational qualifications, partly account for the higher salaries paid in the public sector. Interestingly, if we restrict our analysis to formal employment only, the picture becomes slightly different (table 4). In general, the wage premium for public administration employees is lower and even becomes negative in some countries, such as Mali or the Congo, meaning that in those countries public administration employees are paid less than formal employees of the private 21 ILO Working Paper 134 sector, all other things being equal. 11 This indicates that part of the wage premium resulting from comparing the average wages of employees in the public and private sectors is driven by the fact that more public-sector employees than private-sector employees are in the formal economy, where wages are higher on average. Once this different composition is fully accounted for, the wage premium associated with public-sector employment decreases. The premium associated with working in the public administration compared to the public sector decreases by 12 per cent on average when the analysis is restricted to employees in the formal economy only. Unfortunately, it has not been possible for us to provide a comparison with formal private-sector employees in Egypt, but in a previous study, Tansel, Keskin and Osdemir (2020) found a persistent public-sector wage penalty for males and a public-sector wage premium for females (except at the top of the distribution). XTable 4 - Percentage difference in hourly wages of employees in the public and private sectors, by gender, considering only formal employment Country Wage differential OVERALL Wage differential WOMEN Wage differential MEN Namibia 56% *** 63% *** 48% *** Burkina Faso 76% *** 46% 91% *** Cameroon 63% *** 80% *** 54% *** Kenya 45% *** 44% *** 46% *** Zambia 27% *** 22% ** 31% *** Eswatini 40% *** 49% *** 32% *** Ghana 51% *** 50% *** 52% *** Senegal 17% *** -1% 24% *** Côte d’Ivoire 29% *** 46% *** 23% *** Chad -2% 19% -6% Mali -25% *** -43% ** -20% * Congo -23 % *** -15% -25% *** Angola 11% * 5% 13% ** Madagascar 27% * 32% * 23% Botswana 0% *** 3% -4% Ethiopia 5% *** 13% *** 3% Guinea-Bissau -7% 15% -13% Malawi -8% -13% -6% Democratic Republic of the Congo -23% *** -32% *** -8% Source: ILO estimates 11 These results need to be interpreted with caution, because in many countries the exclusion of informal employment limits the sample size and in the specific cases of Mali and the Congo, the number of wage employees working in the private sector in the formal economy is less than 100. 28 ILO Working Paper 134 such as teaching, healthcare or revenue administration where the outputs and outcomes are easier to measure. For more complex tasks, however, there remains a lack of evidence. 29 ILO Working Paper 134 Annex XTable 1 bis –Year of collection of labour force survey in each country Survey Year of collection Angola Inquérito ao Emprego em Angola (Survey of Employment in Angola) 2021 Botswana Multi-Topic Household Survey 2022 Burkina Faso Enquête Régionale Intégrée sur l'Emploi et le Secteur Informel 2018 Cameroon Enquête auprès des Ménages 2014 Chad Enquête Harmonisée sur les Conditions de Vie des Ménages 2018 Côte d’Ivoire Enquête nationale sur la situation de l'emploi 2019 Democratic Republic of the Congo Enquête 1-2-3 sur l'Emploi et le Secteur Informel 2012 Egypt Labour Force Sample Survey 2021 Eswatini Labour Force Survey 2021 Ethiopia National Labour Force Survey 2021 Ghana Labour Force Survey 2015 Guinea-Bissau Inquérito Harmonizado sobre às Condições de vida dos Agregados Familiares 2018 Kenya Household Budget Survey 2019 Madagascar Enquête Nationale sur l'Emploi et le Secteur Informel 2015 Malawi Labour Force Survey 2013 Mali Enquête Modulaire et Permanente auprès des Ménages 2020 Namibia Labour Force Survey 2018 Nigeria General Household Survey 2019 Congo Enquête sur l'emploi et le secteur informel 2009 Senegal Enquête Nationale sur l'Emploi 2019 United Republic of Tanzania National Panel Survey 2020 Zambia Labour Force Survey 2021 30 ILO Working Paper 134 XFigure 4 bis - Standard deviation of the number of hours worked in a week, by full-time public administration employees and wage workers employed elsewhere Source: ILO estimates XFigure 5 bis - Percentage difference in hourly median wage between public administration employees and all other employees Source: ILO estimates 31 ILO Working Paper 134 References Abdelhamid, Doha and Laila El Baradei. 2010. “Reforming the Pay System for Government Employees in Egypt”. International Public Management Review 11(3): 59–85. Abdallah, Chadi, David Coady and La-Bhus Fah Jirasavetakul, L. 2023. Public–Private Wage Differentials and Interactions Across Countries and Time. IMF Working Paper No. 2023/064. Ahmad, Farooq, et al. 2024. “Back to the Future Revisited: A Systematic Literature Review of Performance-Related Pay in the Public Sector”. International Public Management Journal 27 (6): 896–920. Arisoy, Elmas, Knut J. Leipold and Kouami Hounsinou Messan. 2023. “The Expanding Role of Public Procurement in Africa’s Economic Development”. World Bank Blogs (blog), 17 January. Calero, Carl, and Guillaume Delautre. 2023. Participation and Employment in Seven Developing Economies: An Age-Period-Cohort Analysis. ILO and European Commission Background Paper No. 12. Demirgüç-Kunt, Asli, Michael Lokshin and Vladimir Kolchin. 2023. “Effects of Public Sector Wages on Corruption: Wage Inequality Matters”. Journal of Comparative Economics 51(3): 941–959. Endegnanew, Yehenew, Mauricio Soto and GenevièveVerdier. 2017. “Do Elections Affect the Wage Bill?”. In Fiscal Politics, edited by Vitor Gaspar, Sanjeev Gupta and Carlos Mulas Granados, 137– 151. IMF. Finan, Frederico, Benjamin A. Olken and Rohini Pande. 2015. The Personnel Economics of the State. NBER Working Paper 21825. Forni, Lorenzo, and Natilija Novta. 2014. Public Employment and Compensation Reform during Times of Fiscal Consolidation. IMF Working Paper WP/14/192. Gindling, T.H, et al. 2020. “Are Public Sector Workers in Developing Countries Overpaid? Evidence from a New Global Dataset”. World Development 126 (2): 104737. Hasnain, Zahid, Nick Manning and Jan Henryk Pierskalla. 2014. “The Promise of Performance Pay? Reasons for Caution in Policy Prescriptions in the Core Civil Service”. The World Bank Research Observer 29 (2): 235–264. Holmstrom, Bengt, and Paul Milgrom. 1991. “Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design”. Journal of Law, Economics, & Organization 7 (Special Issue): 24–52. IMF. 2016a. Case Studies on Managing Government Compensation and Employment: Institutions, Policies and Reform Challenges. ___. 2016b. Managing Government Compensation and Employment: Institutions, Policies and Reform Challenges. ___. 2018. Public Wage Bills in the Middle East and Central Asia. 32 ILO Working Paper 134 ___. 2023a. “Coming Down to Earth: How to Tackle Soaring Public Debt”. In IMF, World Economic Review: A Rocky Recovery, 69–89. ___. 2023b. Mali: Selected Issues. IMF Staff Country Reports 2023 (210) ___. n.d. “World Economic Outlook Databases”. Keller, Berndt. 2013. “Germany: The Public Sector in the Financial and Debt Crisis”. European Journal of Industrial Relations 19(4): 359–374. ___. 2020. “Employment Relations without Collective Bargaining and Strikes: The Unusual Case of Civil Servants in Germany”. Industrial Relations Journal 51 (1–2): 110–133. Kerr, Andrew, and Martin Wittenberg. 2017. Public Sector Wages and Employment in South Africa. SALDRU Working Paper 214. Lienert, Ian, and Jitendra Modi. 1997. A Decade of Civil Service Reform in Sub-Saharan Africa. IMF Working Paper 97/179. OECD. 2019. Government at a Glance 2019. Ong’era, Alfred, and Beverly Muthoki. 2019. Public Sector Reforms in Kenya: Challenges and Opportunities. KIPPRA Working Paper No. 29. Owusu, F., Ohemeng, F. 2012. “The Public Sector and Development in Africa: The Case for a Developmental Public Service”. In Rethinking Development Challenges for Public Policy: Insights from Contemporary Africa, edited by Kobena T. Hanson, George Kararach and Timothy M. Shaw, 117–154. Palgrave McMillan. Reichard, Christoph. 2022. “New Public Management”. In International Encyclopedia of Civil Society, edited by Regina A. List, Helmut K. Anheier and Stefan Toepler. Springer. Rickard, Stephanie J., and Teri L. Caraway. 2019. “International Demands for Austerity: Examining the Impact of the IMF on the Public Sector”. Review of International Organizations 14: 35–57. Robinson, Derek. 1990. Civil Service Pay in Africa. ILO. Rodrik, Dani. 2000. “What Drives Public Employment?”. Review of Development Economics 4(3): 229–243. Sawaneh, Banna, Alagie Fadera and Ayo Adesopo. 2022. “Civil Service Reforms: A Case Study of the Gambian Civil Service”. Journal of Public Administration, Finance and Law 11 (24): 87–97. Simson, Rebecca. 2019. “Ethnic (In)Equality in the Public Services of Kenya and Uganda”. African Affairs 118 (470): 75–100. ___. 2022. “With Inflation Rising, Will Africa Face Another Crisis in Public Sector Pay?”. ODI Global. Tadesse, Worku M. 2019. “Public Service Reform in Ethiopia: Challenges and Gaps PostImplementation”. Africa’s Public Service Delivery and Performance Review 7(1). 33 ILO Working Paper 134 Tansel, Aysit, Halil Ibrahim Keskin and Zeynel Abidin Ozdemir. 2020. "Public–Private Sector Wage Gap by Gender in Egypt: Evidence from Quantile Regression on Panel Data, 1998–2018". World Development 135. Thevenot, Celine, and Sébastien Walker. 2024. “How to Set Compensation for Government Employees”. IMF. Weibel, Antoinette, Katja Rost and Margit Osterloh. 2009. “Pay for Performance in the Public Sector: Benefits and (Hidden) Costs”. Journal of Public Administration Research and Theory 20 (2): 387–412. Williams, Martin J., and Liah Yecalo-Tecle. 2019. “Civil Service Reform and Performance Management in Ghana and Zambia Since 1990”. IGC policy brief. World Bank. 2021. Worldwide Bureaucracy Indicators: Methodology, Insights, and Applications. Yemin, E. 1990. “Preface”. In Robinson. 34 ILO Working Paper 134 Acknowledgements The authors would like to thank the two internal peer reviewers for their helpful and constructive comments that greatly contributed to improving this working paper. The authors remain of course responsible for all errors contained in the text. Conditions of Work and Equality Department (WORKQUALITY) Inclusive Labour Markets, Labour Relations and Working Conditions Branch (INWORK) International Labour Organization Route des Morillons 4 1211 Geneva 22 Switzerland T +41 22 799 6754 XAdvancing social justice, promoting decent work The International Labour Organization is the United Nations agency for the world of work. We bring together governments, employers and workers to improve the working lives of all people, driving a human-centred approach to the future of work through employment creation, rights at work, social protection and social dialogue. I S B N 9789220417034 9HSTCMA*ebhade+ 9 789220 417034 Contact details