in developing countries employs a far larger share<sup>of the nonagricultural labor force--23 percent (31 percent in</sup> Africa)--compared with 9 percent, on average,<sup>for the OECD countries.7The public sector also absorbs a far</sup> larger share of formal wage employment in developing<sup>countries--for example, almost 80 percent in Zambia and</sup> other African countries (including parastatals), and<sup>67 percent in Bangladesh (Lindauer, Meesook, and Suebsaeng</sup> 1988, 3; Murshid and Sobhan 1987:1).

Second, there is a point of inflection -- 20 to<sup>25 percent of nonagricultural employment in the</sup> public sector above which public sector wages do<sup>affect national wage determination. This threshold is exceeded</sup> in a number of Western European countries and<sup>is 24 percent of nonagricultural employment, on average, in</sup> the public sector in OECD countries. It is crossed<sup>in almost all countries in Africa (54 percent), Asia (36</sup> percent) and, to a lesser extent, Latin America (27 percent).<sup>Third, governments particularly in Africa tend to</sup> be overstaffed with administrators. Across all countries,<sup>there are 25 to 30 central government employees per</sup> 100 inhabitants who have administrative functions<sup>(Heller and Tait 1984:251. This number is highest in Africa</sup> (29 per 100), lowest in Asia (14 per 100), with Latin<sup>America and the OECD countries in the high range (22</sup> and 25 per 100, respectively).

Data on aggregate civil service employment<sup>are not sufficient, however, for the analysis of</sup> underlying influences. Additional breakdowns by job<sup>categories and skill levels of workers, by job functions, by</sup> ministry or agency, are needed. In practice, data<sup>for such studies are often lacking, unreliable, or inconsistent.</sup> It is not uncommon, for example, for a ministry of finance's<sup>figures for the total number of civil servants and</sup> the total wage bill to differ (sometimes greatly), from<sup>the sum of the totals for the individual ministries. Thus,</sup> the notion of a public sector that employs "too many workers"<sup>is often a residual concept derived from</sup> inadequate operating budgets for nonsalary budget posts.<sup>Nonetheless, the available data indicate that a large</sup> public sector can negatively affect the economy in a number<sup>of budgetary and extra-budgetary ways.</sup>

# **Impact on** employment

Although public sector employment does not<sup>respond to macroeoconomic signals, many</sup> governments hire countercyclically (ILO 1990:19), and<sup>are then unable to release labor countercyclically --</sup> supporting the notion that the public sector does respond<sup>first and foremost to political economy concerns.</sup> Empirical substantiation for the contention that the result<sup>is a surplus of public servants (relative to a base year)</sup> would be provided by the following: the ratio of the rate<sup>of growth of government employment (or spending on</sup> employment) to the rates of growth of GDP, all government<sup>spending, tax revenues, the total working age</sup> population, the modern sector labor force, or other indicators.

The wage bill as a share of government spending. The<sup>wage bill as a share of central</sup> government spending fell from 20.3 percent to 18.7 percent for<sup>developing countries in the aggregate between</sup> 1980 and 1987. The wage bill share rose slightly in Asia<sup>and sharply in the Middle East, remained constant in</sup>