Last updated on April 30, 2022
What is the public sector?
The public sector is a part of the economy that comprises all organizations that are owned and operated by the government. This includes everything from schools and hospitals to roads and bridges. The main purpose of the public sector is to provide services that are considered essential for the well-being of society. These services are typically provided free of charge or at a subsidized rate. Similar to the voluntary sector, organizations in the public sector do not seek to generate a profit.
Definitions of the public sector
Various ways can be used to define the public sector. Jan-Erik Lane explains in his book The Public Sector: Concepts, Models and Approaches that the public sector can be defined in a number of ways, some of which are and can be categorized as:
- General public sector definition
- “Government activity and its consequences”
- Definition with a legal and authority focus
- “State general decision-making and its outcomes”
- Definition(s) of economic focus
- “Governmental consumption and investment”
- “Government production”
- “Governmental consumption and investment”
The role of the public sector
The public sector plays a vital role in ensuring the smooth functioning of our society. It provides essential services that are necessary for the well-being of our communities. Additionally, the public sector plays an important role in promoting economic growth and stability.
How has the role of the public sector changed over time?
The role of the public sector has changed significantly over time. In recent years, there has been a shift towards privatization and outsourcing of public services. This has led to a decrease in the size of the public sector and an increase in the number of private sector organizations providing services that were previously considered to be part of the public domain.
Funding of the public sector
Funding for public services is usually raised through a variety of methods, including taxes, fees, and financial transfers from other levels of government (e.g. from a federal to a provincial or state government).
Different governments from around the world may employ their own unique method of funding for public services.
For example, in Canada, a Crown corporation is an enterprise owned by the Crown (or Queen) but still has the ability to function as a private enterprise. The BC Lottery Corporation is a provincial Crown corporation and in 2013/14 generated $1.17 billion dollars of net revenue that it was able to directly invest back into BC’s provincial economy.
Sometimes the public sector will partner with an organization in the private sector to create a public-private partnership. These hybrid organizations (named P3s) work together to jointly deliver a service or business venture to a community.
Through the process of outsourcing, public sector organizations will often engage private enterprises to deliver goods and services to their citizens.
Different types of public sector organizations
There are a wide variety of public sector organizations, each with its own unique mandate and purpose. Some common examples of the public sector organizations include:
- Educational institutions: Public schools, universities, and colleges are all examples of organizations that fall under the public sector.
- Healthcare facilities: Hospitals, clinics, and other health services are typically provided by the public sector.
- Transportation infrastructure: Roads, bridges, airports, and mass transit systems are all typically managed by government agencies.
- Utilities: Electricity, water, and sewage are all examples of essential services that are typically provided by the public sector.
Some additional examples include:
- Emergency Services
- Fire Service
- Gas and Oil
- Law Enforcement
- Police Services
- Postal Service
- Social Services
- Waste Management
How do public sector organizations differ from private sector organizations?
There are a few key ways in which public sector organizations differ from private sector organizations. Firstly, public sector organizations are typically owned and operated by the government, while private sector organizations are typically owned and operated by individuals or companies. Secondly, the main purpose of public sector organizations is to provide services that are considered essential for the wellbeing of society, while the main purpose of private sector organizations is to generate profit. Finally, public sector organizations are typically funded by taxpayers, while private sector organizations are typically funded by shareholders or investors.
The Three Levels of Government in the Public Sector
In the United States, there are three levels of government in the public sector: federal, state, and local. Each level of government has different responsibilities and they all interact with each other to some degree. There is also a hierarchy of authority between the three levels of government.
- Federal or National: responsible for national defense, foreign policy, printing money, regulating interstate commerce
- Regional (State or Provincial): responsible for education, transportation, prisons, and welfare
- Local (Municipal or County): responsible for police and fire departments, zoning, and trash collection
Providing public services is often the responsibility of several levels of government, each of which provides some or all of the services. Because of this, public services are often delivered through a variety of different intergovernmental organizations simultaneously.
The three levels of government interact with each other in a few ways. The federal government can provide financial assistance to state and local governments through grants. State governments can also enter into agreements with each other, known as compacts, which allow them to cooperate on issues of mutual concern. Lastly, the three levels of government can sue each other in court.
The federal government is at the top of the hierarchy of authority between the three levels of government. The Constitution gives the federal government authority over matters that are national in scope, such as defense and foreign policy. The federal government also has the power to preempt state laws, meaning that if there is a conflict between state law and federal law, the federal law will take precedence.
Trends in the Public Sector
In the United States, researchers Keith Hall and Robert Greene state that since the beginning of the Great Recession, the private sector has been shrinking while the public sector has been growing in most states.
In Canada, the public sector is also ‘crowding out’ private job growth.
In the United Kingdom, the opposite seems to be true: the private sector is growing while the public sector is shrinking.
Public sector’s five largest employers
According to research done in 2019 by Statista, the top 5 largest state-owned Fortune 500 companies are as follows:
- China National Petroleum (China) – ca. 1.34 million employees
- China Post Group (China) – ca. 927.000 employees
- State Grid (China) – ca. 907.000 employees
- U.S. Postal Service (USA) – ca. 565.000 employees
- Deutsche Post (Germany) – ca. 504.000 employees
Despite their appearance and behavior as private companies, these companies are de facto public companies. This is particularly true for Chinese companies.
Public sector jobs
According to a 2019 UK study, a majority of the workers in the public sector are women (ca. 65%). This is primarily due to the fact that more women are choosing careers in education, facilities management, and healthcare. Police officers (70% men), doctors (54% men), and university lecturers (52% men) were the three occupations with more men than women.
There is a wide range of jobs available in the public sector. Some common examples include:
- Teachers (primary and secondary school) – ca. 15,7%
- Nurses and midwives (including assistants) – ca. 11,1%
- Administrators – ca. 4%
Some other examples of public sector jobs and professions include:
- Social workers
- City planners
- Guidance counselors
- Art administrators
- Immigrant support specialists
- Financial caseworkers
- Personal assistants
- Coast guards
- Crossing guards
- Transit authorities
- Theatre managers
- Intelligence analysts
What are some challenges facing the public sector?
There are a number of challenges facing the public sector. These include:
- Budget cuts: Many public sector organizations have been subject to budget cuts in recent years, which has led to a decrease in the quality of services provided.
- Privatization: The privatization of public services has led to a decrease in the size of the public sector and an increase in the number of private sector organizations providing services that were previously considered to be part of the public domain.
- Political interference: Political interference can often lead to decisions being made that are not in the best interests of the public.
What are some common misconceptions about the public sector?
There are a number of misconceptions about the public sector. These include:
- The public sector is inefficient: The public sector is often criticized for being inefficient and wasteful. However, this is not always the case. In many cases, the public sector is more efficient than the private sector.
- The public sector is corrupt: The public sector is often criticized for being corrupt. However, this is not always the case. While there are certainly instances of corruption within the public sector, this problem is not unique to the public sector and exists in both the private and public sectors.
How can the public sector be improved?
There are a number of ways in which the public sector can be improved. These include:
- Increasing transparency and accountability: Increasing transparency and accountability will help to reduce corruption within the public sector.
- Improving efficiency: Improving efficiency will help to reduce waste and increase the quality of services provided by the public sector.
- Investing in training and development: Investing in training and development will help to ensure that public sector employees have the skills and knowledge necessary to provide high-quality services.