The public sector is composed of different careers with their own rules and human resources management, which have undergone profound changes over the last two decades. The permanent debate surrounding careers and working conditions in the public sector primarily revolves around identifying wage differentials and other forms of benefits compared to the private sector. However, a proper assessment of the wage premium should not rely solely on a simple comparison of wages between sectors but rather consider the differences in the workers’ productive skills.

The assessment of the public sector wage premium is based on microdata from the EU-SILC survey.  Hourly wages are used, and differences resulting from a diverse composition between both sectors in terms of gender, experience and education are controlled for. It is concluded that the public sector average wage premium stands at around 11% in 2018-19, having decreased by 3 p.p. since 2008-09. For the euro area average the premium is lower, despite variations in the composition and size of the public sector across countries. The premium in Portugal has been approaching the euro area average, although it is still around 6 p.p. higher.

For more details see “Policy insights – Public-private wage differential in Portugal”, Economic Bulletin of Banco de Portugal, June 2023.

Prepared by Cláudia Braz, Manuel Pereira and Sharmin Sazedj. The analyses, opinions and findings expressed above represent the views of the authors and not necessarily those of Banco de Portugal or the Eurosystem.

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