Governments are responsible for a wide variety of tasks: regulating society and the economy, delivering public services, such as education, health, justice, policing, transportation, etc. as well and redistributing income via social benefits (e.g. pensions, unemployment insurance, etc.). These functions can be carried out by different levels of government and in some countries government also owns and operates key enterprises (e.g. state–owned enterprises). These tasks are primarily carried out by public employees, including doctors, nurses, teachers, policemen, policy advisors, and economists, to name a few key public sector occupations. As a result, the size of the public sector employment and its share in total employment is an indicator of the size of the government and its weight in a country’s economy. However, outsourcing some of these functions is an increasing trend in many governments. In this case the costs are covered by government, but those who carry out these tasks are not considered public employees. This way the more stringent employment laws related to public employees or civil servants do not apply, providing greater flexibility to the government employer. As a result, to understand more completely the size of the public sector in the economy, both public expenditures and public employment data need to be considered.
Public employment in 2018 for the Western Balkans for which data are available – Bosnia and Herzegovina, Kosovo, North Macedonia and Serbia - is on average 27.2% of total employment. It is considerable higher than the OECD average at 21.1% and somewhat higher than the OECD-EU average at 23.7%. There is significant variation among the Western Balkans, with Kosovo having the largest share of public sector employment with 30.8% of total employment while North Macedonia has the lowest with 22.8%.
When analysing the annual average growth rate of public employment in the period 2011-18 in the region, it increased by 0.1% annually, while total employment increased by 1.8 % annually. This is below the annual average growth rate of public sector employment of 0.6% in the OECD and 0.4% of the OECD-EU countries and above the average annual growth rate in total employment in the OECD and the OECD-EU countries (both at 1.1%). Looking at the situation on a country-by-country basis, Serbia and North Macedonia increased their public workforce at an annual rate of 1.0% and 0.9%, while Bosnia and Herzegovina reduced its size at an annual rate of 1.0% and Kosovo of 0.5%. But in all four, total employment increased and outpaced public sector employment: in Serbia the average annual growth rate for total employment amounted to 3.3%, in North Macedonia 2.4%, in Kosovo 1.4% and only in Bosnia and Herzegovina by 0.1%.
The higher overall share of public employment to total employment in the Western Balkan region might be explained by several reasons: historically socialist states operated with a large public sector; with the creation of new, independent states from the old Yugoslavia they were required to build their own public service; and public sector employment could be a stabilizing element in the region. In addition, total employment might be under-reported in these countries and economies due to the large share of the informal economy, compared to public employment numbers, which are all reported.
