13/07/2017 - Governments have responded differently to new demands on them since the global crisis, with many raising spending on social services, some trimming public sector employment and most stabilising day-to-day running costs at a lower level. Countries should now seek to correct the steady decline in public investment since 2009, according to a new OECD report.
Government at a Glance 2017 finds that government spending averaged 40.9% of GDP in OECD countries in 2015, up from 38.8% in 2007, before the crisis. The number of government jobs as a share of total employment remained little changed at 18.1% in 2015 versus 17.9% in 2007, although some countries have reported workforce reductions.
While ageing populations and high unemployment drove up social costs to 41% of overall spending in 2015 from 37% in 2007, governments used cost cuts and better efficiency to trim running costs to 37% of spending from 39%. Meanwhile, despite low interest rates, public investment has declined from a 2009 peak of 9.3% of spending to 7.7% in 2015.
Government spending as a share of GDP is highest in France (56.5% in 2016) followed by Finland (56.1%) and Denmark (53.6%). Spending was lowest in 2015 (latest data available) in Mexico (24.5%), Ireland (29.5%) and Korea (32.4%).
On average, government employment dipped in 2011-12 then rebounded over 2014-15. The share of government employment decreased the most in the UK and Israel over 2007-15 and rose most in the Czech Republic, Estonia, Hungary, Slovenia and Spain.
The fifth edition of the OECD’s biennial comparison of public sector performance in major economies, finds the biggest share of public investment (a third) goes into economic areas like transportation and energy. The next biggest share (15%) goes on defence. Restoring public investment in areas like infrastructure, technology, green energy and education should have a positive impact on future employment and healthcare, it says.
Working to further improve efficiency and productivity, including through the use of spending reviews, performance evaluation and behavioural insights, and focusing on key areas like public procurement in the health sector could generate more savings that could be channelled into much-needed public investment.
2016 survey data in the report on pay in central government shows a tendency to reward managerial responsibility over technical specialisation. On average, top-level managers earn 27% more than senior managers, 72% more than middle managers, 2.6 times more than senior professionals and four times more than support staff. Adjusted for GDP per capita to account for differences in economic development, top-ranking and middle managers earn the most in Mexico and Colombia and the least in Iceland and Norway. The pay difference between top and middle managers is the highest in Australia, Chile, Canada and the UK.
The report also looks at the pay of public agents like police, immigration officers and tax inspectors. It finds that police officers on central government payroll earn an average of USD 64,795 (at purchasing power parity) while police inspectors earn USD 81,952. Adjusted for differences in GDP per capita, police officers earn the most in Greece, Spain and Portugal.
Other key findings include:
Download the report: www.oecd.org/governance/govataglance.htm
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