Our economy experienced some extremely difficult times these last few years. People seeking employment in competitive job markets must do everything they can to keep their options open. At the moment, many career opportunities exist in both the public and private sector; however, the private sector appears to be losing popularity in the job market more recently. We can attribute this loss to the non-wage incentives offered by public sector employers to executive level employees. But, do public or private executives earn a higher salary?
Before we examine the differences between private and public executive level earnings, let’s define the two industries. Public sector employees usually serve as part of the government or a government agency. Private sector jobs are generally associated with the business world (example: business owners, organizations, independent corporations, etc.)
At the moment, federal and provincial governments continue to struggle with deficits. These agencies seek solutions to halt excessive spending. More and more employees show interest in learning how wages (and non-wage benefits) compare between employment in the private sector and the public sector. Who has the higher salary between these two?While some may view a job’s payscale as the sole factor indicative of a job’s worth, we believe that many other benefits should be considered (such as medical insurance, days off, incentives etc.)
Both public and private executive level employees face their own challenges when it comes to compensation and work benefits. Public sector employees’ salaries cannot compare to those of Chief Executive officers in the corporate world. PayScale discovered some interesting facts about the difference in public and private earnings for CEOs and their employees. This chart portrays the differences in salary. It also draws attention to the unpredictable nature of these salaries.
“Average pay levels vary between the public and private sectors because of the different jobs and characteristics of the people within each sector” – Source: Ons.gov.uk
Each sector of employment presents its own unique set of challenges. This means that executive compensation greatly varies according to size, age, and profit of the business. The public sector may suit your friend’s professional interests. That doesn’t mean that it will also benefit you. Furthermore, many executive salaries are not made available to the public. This lack of transparency creates challenges to accuracy.
Public versus Private Sector
According to a study conducted by Epi.org, CEO payment in both the private and public sectors continues to rise while employee salaries remain the same. James F. Reda also conducted a study on Private vs. Public Total Compensation. According to his findings, privately-held companies usually approach compensation differently than public companies. In other words, compensation philosophies differ vastly.
Public companies focus more on financial rewards, while public sectors provide employees with more benefits (like better medical access, education, equity, long-term retirement incentives, or insurance). Another thing to consider is the major difference between the roles of a CEO in a private company to that of one from the public sector. The following report (from Jfreda) shows a private CEO’s pay as a percentage of a public CEO’s compensation plan:
From the perspective of total compensation, this factor is not an equivalent measure. Different private companies offer their own benefits packages which include more than just financial bonuses. The industry with the highest salary is not the most important factor for drawing employment from the job market.
“On average, chief executives likely earn more, and first-line supervisors probably earn less than mid-level managers.” – Source: Ons.gov.uk
Pursuing an Executive Level Job
The road to becoming a CEO is similar for both private and public sector. A certain blueprint exists that all employees must follow in order to obtain this title. First of all, you must distinguish yourself from the rest of the employees with the help of strong leadership skills, unique personality traits, and unusual talents. Secondly, you must obtain the proper level of education for the position. While no laws exist stipulating that CEOs must possess college education, very few CEOs in the US don’t possess a bachelor’s degree. Experience is vital as well. Of course, this experience must be pertinent to the company’s field and the position.
The Fas.org report clearly shows that private sector employment is decreasing due to the effects of the 2007 recession. Also, the public sector now consists of larger organizations whose employees earn slightly more compensation than employees of smaller organizations. A report from 2013 demonstrates that public sector workers earn an average of 13% more than private sector employees and CEOs once you factor in the additional benefits. However, on average, private sector CEOs earn more compensation than their public sector counterparts. Employees and potential executives are being attracted to these industries due to the stability and compensation philosophy of public sector jobs.
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