Public Employment and Compensation Reform During Times of Fiscal Consolidation

24 Pages Posted: 22 Nov 2014

See all articles by Lorenzo Forni

Lorenzo Forni

International Monetary Fund (IMF)

Natalija Novta

International Monetary Fund (IMF)

Date Written: October 2014

Abstract

This paper compiles and compares recent and past measures introduced to contain the public wage bill in a number of emerging and advanced economies to assess their effectiveness in bringing down expenditure in a sustained way. In the aftermath of the Great Recession a number of countries have approved measures on the wage bill as part of fiscal consolidation efforts. These recent episodes are compared to past cases implemented in advanced economies over the period 1979–2009. Findings suggest that public wage bill consolidation episodes pre and post 2009 are similar in many respects. Moreover, typically countries that were able to achieve more sustained reductions in the wage bill have implemented to larger extent structural measures, and/or these measures were accompanied with substantial social dialogue and consensus.

Keywords: Employment, Public sector, Employee compensation, Civil service reform, wage bill, fiscal consolidation, public reform, public employment, wages, recession, employment level, wage freeze, government employment, labor market, wage freezes, wage indexation, employment measures, salaries, pay for performance, wage policies, benefits, employment data, public sector wage, compensation packages, salary, wage bargaining, compensation of employees, public sector employment, number of employees, public sector wages, payroll, employment levels

JEL Classification: H10, H50, H60

Suggested Citation

Forni, Lorenzo and Novta, Natalija, Public Employment and Compensation Reform During Times of Fiscal Consolidation (October 2014). IMF Working Paper No. 14/192. Available at SSRN: https://ssrn.com/abstract=2529311

Lorenzo Forni (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Natalija Novta

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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