Client: Ministry of Finance

Period: 2012

How do wages in the public sector differ from those in the private sector? As shown in this brief report, the answer depends significantly on the definition of public sector. We present estimates of public-private sector wage differentials in Estonia for various subgroups of the public sector, differentiating between the state and local government levels and different economic activities such as public administration, education and health.

The results indicate that in the period under consideration, wages of public administration employees have been broadly in line with wages of private sector employees with comparable characteristics. In education, the wages of employees in the state-owned educational establishment were not statistically different from those of private sector employees. For employees of local government owned educational establishments, wages were significantly lower than those of comparable private sector employees. Employees in health and social work establishments had wages lower than those in the private sector for most years during the period considered.

The analysis was commissioned by Estonian Ministry of Finance