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1 feature Bryce Millard ad Adrew Machi Characteristics of public sector workers SUMMARY This article presets aalysis of public sector employmet, ad makes comparisos with the private sector, usig data from the Labour Force Survey. It looks at characteristics which differetiate people employed i these sectors, comparig proportios of public ad private sector workers i differet groups: by sex, age, ethicity, disability, full ad part-time workig, usual hours worked, job teure, uio membership, occupatio ad level of qualificatios. The article also explais some of the limitatios of the data used ad the methodology used to derive the estimates. This article is part of a series providig aalysis of public sector employmet (PSE) statistics. Previous recet articles have focused o treds ad regioal estimates. The article provides further iformatio o the characteristics of public sector employees, ad updates some earlier aalysis. Estimates based o returs from public sector orgaisatios are the preferred source of official UK statistics o the level of, ad treds i, public sector employmet. But these ca provide oly limited iformatio o the characteristics of public sector employees. The Labour Force Survey (LFS) provides a wealth of iformatio about people which caot be obtaied from busiess sources. The LFS is therefore used to provide comparisos of characteristics of public ad private sector workers, although some adjustmets are made to the data to compesate for kow deficiecies i the distictio betwee public ad private sector workers i the survey. Use of LFS data for aalysis of public sector employmet The LFS is a large household survey carried out cotiuously across the UK, samplig over 50,000 households every quarter. It provides the mai headlie measures of employmet for the whole ecoomy. But aalysis of the LFS by public/private classificatios, as for aalysis of employmet by idustry, has a umber of limitatios. LFS public/private sector ad idustry classificatios are made o the basis of survey respodets views about the orgaisatios for which they work. As a cosequece, they are likely to suffer from reportig error as well as the figures ot correspodig to the Natioal Accouts defiitio used to produce PSE estimates from admiistrative sources. For example, accordig to the Natioal Accouts defiitio, uiversity staff ad GPs should be classified ito the private sector, while at preset they remai i the public sector accordig to the defiitio applied withi the LFS. The raw LFS estimates of public sector employmet are aroud oe millio higher tha those from the PSE. The LFS estimates are therefore adjusted to match more closely Natioal Accouts defiitios ad to be more i lie with the data obtaied from public sector employers. Eve so, the adjusted LFS PSE estimates are still higher, ad the differece betwee estimates from the two sources has grow over recet years, as discussed i the recet article o regioal PSE estimates. The approximate adjustmets which have bee made to the LFS public/private sector data are described i the Techical Note. 46

2 Characteristics of public sector workers Box 1 Notes ad defiitios The public sector is made up of employees, icludig those employed o govermet employmet ad traiig schemes. The private sector icludes the self-employed ad upaid family workers. Aual data from the LFS are based o four-quarter averages. Those for 1997 to 2005 are based o seasoal quarters: witer (December to February), sprig (March to May), summer (Jue to August) ad autum (September to November). For 2006 they are based o caledar quarters: Jauary to March (Q1), April to Jue (Q2), July to September (Q3), ad October to December (Q4), reflectig a chage to the mai reportig periods for LFS microdata (see also Techical Note). All tables are based o LFS data. I additio, the figures i Tables 2 ad 4 are also costraied so that they are cosistet overall with the percetages of people employed who work i the public (or private) sector, accordig to the ONS published PSE series, that is, also usig overall estimates of PSE from public sector orgaisatios. The aual data o this basis relate to the secod quarter (Jue), seasoally adjusted from 1999 but ot seasoally adjusted before Aalysis of characteristics of public sector workers ad comparisos with the private sector Sex Table 1 compares the percetages of male ad female workers i the public ad private sector from 1997 to There are early twice as may wome (65 per cet i 2006) as me (35 per cet) workig i the public sector. This patter of male ad female employmet is the opposite of that which is foud withi the private sector, where there is a greater proportio of me compared with wome (59 per cet ad 41 per cet i 2006, respectively). While there has bee a icrease of 2 percetage poits i the proportio of public sector employees who are wome (ad a correspodig reductio for me) over the period 1997 to 2006, the patter for male ad female employees withi the private sector has bee stable over the same period. Lookig at the data i a differet way (see Table 2), the proportio of wome who were employed i the public sector was 29 per cet i 2006, a icrease from 27 per cet i 1997, while the proportio of me workig i the public sector has bee relatively costat at aroud 13 per cet. Age Accordig to Table 3, 74 per cet of those workig withi the public sector i 2006 are over 35 years of age, compared with 62 per cet of those workig i the private sector. There is relatively little differece i the proportios aged 25 to 34 (20 per cet ad 22 per cet respectively) while the proportio of public sector workers who are aged uder 25 is much lower tha amog private sector workers (6 per cet compared with 16 per cet). There have bee icreases i the proportios of workers aged over 35 betwee 1997 ad 2006, i both the public ad private sectors, especially for those aged 50 or over. The proportios aged uder 25 have chaged little, while there has bee a declie i both the public ad private sectors i the proportios aged 25 to 34. These chages maily reflect chages i the workforce as a whole. Lookig at the percetages aother way, i terms of proportios of those i particular age groups who work i the public sector, Table 4 shows how this proportio teds to icrease with age. The lowest proportio i 2006 is 5 per cet, for 16 to 17 year olds, risig to 24 per cet for the 35 to 49 year olds ad 23 per cet for those aged 50 or over. Table 4 also shows that the mai chage i these proportios from 1997 to 2006 has bee a icrease i the proportio of workers aged 50 or over who are employed i the public sector, from 20 per cet to 23 per cet. Ethicity Table 5 shows the percetages of those employed withi the public ad private sectors who belog to differet ethic groups. Of those employed withi the public sector i 2006, 8 per cet were from owhite ethic groups, the same as for those workig i the private sector. The mai differece betwee the public ad private sector is that the former teds to have a slightly lower proportio of their workforce from the Asia or Asia British group (3 per cet i 2006 compared with 4 per cet for the private sector) while the opposite is true for Black or Black British workers (3 per cet compared with 2 per cet). The earliest period for which a breakdow by ethicity is available o a cosistet basis from the LFS is There has bee a icrease i the percetage of employees i the o-white ethic group withi the public sector, from 6 per cet to 8 per cet over the period 2001 to 2006, which is maily accouted for by a rise i the Asia or Asia British ad Other ethic groups. These chages reflect geeral chages i the workforce, as there have bee very similar chages i the proportios of those i the o-white ethic group withi the private sector over the same period. Disability I 2006, 14 per cet of employees withi the public sector had a log-term disability compared with 13 per cet of those workig i the private sector. Disability estimates are oly available from the LFS from Table 6 shows that there has bee a icrease over the period 1998 to 2006 of almost 3 percetage poits i the proportios of both the public ad private sector workers with a log-term disability. Full ad part-time workig Accordig to Table 7, the majority of employees withi both the public ad private sector worked full time i 2006 (71 per cet i the public sector, compared with 76 per cet i the private sector). While early a third (29 per cet) of those employed i the public sector worked part time i 2006, a quarter (25 per cet) of those employed i the private sector did so. These proportios have bee early costat for the past te years. From 1997 to 2006, there was a 1 percetage poit fall i the proportio of part-time employees i the public sector, while i the private sector there was a rise of 1 percetage poit i the proportio of part-time workers over the same period. Usual hours worked Table 8 shows that a higher proportio of public sector workers (22 per cet i 2006) usually work for 16 to 30 hours, compared 47

3 Characteristics of public sector workers with private sector workers (17 per cet i 2006). Those employed i the public sector are less likely to work log hours. I 2006, 14 per cet of workers i the public sector had usual weekly hours exceedig 45 hours, compared with 22 per cet i the private sector. The private sector has, however, see a faster declie i the proportio workig over 45 hours, by some 7 percetage poits compared with 1 percetage poit i the public sector betwee 1997 ad Lookig at these figures o usual hours for males ad females separately, Table 8 also shows that the above differeces are cocetrated amog me. There is relatively little differece amog wome i the patter of hours worked i the public ad private sectors. But 69 per cet of me workig i the public sector usually worked 31 to 45 hours per week i 2006, compared with 57 per cet i the private sector. At the same time, 22 per cet of me i the public sector worked more tha 45 hours, while 31 per cet of me employed i the private sector did so. The latter proportio has declied sharply ad steadily sice 1997, from 41 per cet, while the proportio usually workig over 45 hours has declied less steeply for me i the public sector, ad has chaged relatively little amog wome i both sectors. Job teure Table 9 shows comparisos of the proportios of public ad private sector workers, for differet age bads, accordig to legth of job teure, for Of those employed withi the public sector, 40 per cet overall have bee with their employer for more tha te years, compared with 28 per cet i the private sector. This differece is maily explaied by the differeces for those aged 35 or over. While 45 per cet of those withi the public sector aged 35 to 49 have bee with their employer for over te years, 34 per cet of those of the same age i the private sector have bee with their employer for that log. Amog those aged 50 or over, 60 per cet of those workig i the public sector have stayed with their curret employer for more tha te years, compared with 51 per cet of those i the private sector. As show by Table 10, the average legth of job teure is greater i the public sector tha i the private sector, across all age groups. The overall average legth of job teure i 2006 was 10.1 years withi the public sector, compared with 7.7 years for private sector workers. Uio membership Of those employed i the public sector i 2006, 60 per cet said they were members of a trade uio, while i the private sector oly 16 per cet of employees were uio members (see Table 11). Uio membership amog public sector workers fell by 1 percetage poit over the period 1997 to 2006, while the private sector saw a fall of 3 percetage poits over the same period. Occupatio Table 12 shows the differet occupatioal make-up of public ad private sector workers i Nearly two-thirds (64 per cet) of the public sector workforce is composed of those workig withi professioal (23 per cet), associate professioal ad techical (24 per cet), ad admiistrative ad secretarial (17 per cet) occupatios. I cotrast, half as may (32 per cet) of private sector workers are i these occupatios (professioal with 10 per cet, associate professioal ad techical with 11 per cet ad admiistrative ad secretarial with 11 per cet). While oly 5 per cet of public sector employees are i skilled trades, sales ad customer service, ad process plat ad machie operatives occupatios, 33 per cet of private sector workers belog to these occupatios. Of those i the public sector, 8 per cet are employed as maagers ad seior officials, compared with 17 per cet of people workig i the private sector. While 12 per cet of me i the public sector are i jobs as maagers ad seior officials, the proportio amog wome is oly 6 per cet. There is a similar differece i the private sector: 20 per cet compared with 14 per cet, respectively. Highest qualificatio Table 13 shows the proportios of those workig i the public ad private sectors i 2006 broke dow accordig to highest qualificatios attaied. Nearly half those workig i the public sector are educated to degree level (32 per cet) or other higher educatio beyod A level or equivalet (16 per cet), while just over a quarter overall (19 per cet ad 8 per cet, respectively) of those employed i the private sector have these qualificatios. CONTACT elmr@os.gsi.gov.uk REFERENCES Livesey D, Machi A, Millard B ad Wallig A sector employmet 2006: Seasoally adjusted series ad recet treds, Labour Market Treds 114(12), pp ad at Millard B Regioal aalysis of public sector employmet, Ecoomic & Labour Market Review 1(3), pp ad at gov.uk/cci/article.asp?id=1738 Heap D Characteristics of people employed i the public sector, Labour Market Treds 113(12), pp ad at gov.uk/cci/article.asp?id=

4 Characteristics of public sector workers Table 1 Proportios employed withi the public ad private sectors: by sex Table 2 Proportios of people workig i the public ad private sectors: by sex Me Wome All Me Wome All ad data from public sector orgaisatios (ONS) Table 3 Proportios employed withi the public ad private sectors: by age All ages

5 Characteristics of public sector workers Table 4 Proportios of people workig i the public ad private sectors: by age All ages ad data from public sector orgaisatios (ONS) Table 5 Proportios employed withi the public ad private sectors: by ethicity White No-white All Asia or Black or Other Total Asia Black ethic o- Mixed British British Chiese group white

6 Characteristics of public sector workers Table 6 Proportios employed withi the public ad private sectors: by disability Log-term Not log-term disabled disabled All Table 7 Proportios employed withi the public ad private sectors: by full ad part-time status Full-time Part-time All Table 8 Proportios employed withi the public ad private sectors: by sex ad total usual weekly hours worked Over 45 hours hours hours hours hours All Male Female

7 Characteristics of public sector workers Table 8 - cotiued Proportios employed withi the public ad private sectors: by sex ad total usual weekly hours worked Over 45 hours hours hours hours hours All All Table 9 Proportios employed withi the public ad private sectors: by age ad legth of job teure, 2006 Age Job teure Uder to 34 Less tha 5 years Greater tha 5 but less tha 10 years Greater tha 10 years Less tha 5 years Greater tha 5 but less tha 10 years Greater tha 10 years Table 10 Average legth of job teure i the public ad private sectors: by age, 2006 Years Age Uder or over All ages Table 11 Proportios employed withi the public ad private sectors: by trade uio membership Uio No-uio member member All to 49 Less tha 5 years Greater tha 5 but less tha 10 years Greater tha 10 years Notes: 50 or over Less tha 5 years Greater tha 5 but less tha 10 years Greater tha 10 years All ages Less tha 5 years Greater tha 5 but less tha 10 years Greater tha 10 years

8 Characteristics of public sector workers Table 12 Proportios employed withi the public ad private sectors: by occupatio ad sex, 2006 Occupatio Me Wome All Me Wome All Maagers ad seior officials Professioal occupatios Associate professioal ad techical Admiistrative ad secretarial Skilled trades occupatios Persoal service occupatios Sales ad customer service occupatios Process plat ad machie operatives Elemetary occupatios All Table 13 Proportios employed withi the public ad private sectors: by highest level of qualificatio ad sex, 2006 Level of qualificatio Me Wome All Me Wome All Degree level or equivalet Higher educatio GCSE A level or equivalet GCSE Grades A to C or equivalet Other qualificatios No qualificatios All

9 Characteristics of public sector workers TECHNICAL NOTE Method of producig PSE ad private sector employmet estimates from the LFS Estimates of PSE, ad private sector employmet, accordig to the various characteristics aalysed i this article, are produced usig LFS microdata, based o correspodig average estimates for the four quarters of each year. These averages use seasoal quarters up to 2005 ad caledar quarters for 2006, reflectig the chage to the mai reportig periods used for the LFS microdata. Aalysis suggests that this does ot itroduce ay importat discotiuity, makig a differece geerally well withi 1 per cet for aual PSE estimates overall. LFS public/private sector classificatios suffer from some reportig error ad the data do ot correspod to the Natioal Accouts defiitio which is used for the official ONS PSE series. Some adjustmets are therefore made to the LFS microdata to brig the estimates as close as possible to the Natioal Accouts defiitio. The LFS asks respodets two questios to defie whether someoe is employed i the public or private sector. Firstly, those i work i the week before the iterview are asked whether the orgaisatio that they worked for was either: a private firm or busiess or a limited compay, or some other kid of orgaisatio If respodets aswer that it was some other kid of orgaisatio the they are asked what type of o-private orgaisatio was it?. Their respose is the coded as oe of the followig by the iterviewer: a public limited compay (plc) a atioalised idustry/state corporatio cetral govermet or Civil Service local govermet or coucil (icludig police, fire services ad local authority-cotrolled schools/colleges) a uiversity or other grat-fuded establishmet (icludig opted-out schools) a health authority or NHS Trust a charity, volutary orgaisatio or trust the armed forces, or some other kid of orgaisatio If respodets state that they work for a plc, or for a charity, volutary orgaisatio or trust, they are classified as a private sector worker i the LFS. Respodets who report that they are self-employed or a upaid family worker are also classified as private sector workers. Other respodets are classified as public sector workers. Give the way that the LFS classifies people to the public ad private sector, respodets ca ed up beig classified as workig i the public sector whe really they are i the private sector accordig to Natioal Accouts defiitios. A example is employees of public-fuded bodies such as uiversities ad further educatio colleges who are classified as beig i the public sector accordig to the LFS. However, uiversities ad further educatio colleges are, i fact, part of the private sector i the Natioal Accouts as they are ot cotrolled by govermet. Employees workig for agecies ad/or cotractors, carryig out work for a public sector orgaisatio, ca also classify themselves as workig i the public sector i the LFS whe i reality they belog to the private sector, as their employer is a private sector orgaisatio. The data used here to aalyse characteristics of workers i the public ad private sectors are therefore adjusted, to be more i lie with Natioal Accouts defiitios, by reclassifyig, where ecessary, workers who stated that they worked for a uiversity or other grat-fuded istitutio, or as agecy temporary workers, from the public sector ito the private sector. 54

10 Characteristics of public sector workers Note that GPs (icludig detists) ad their practice staff, i the LFS, are coded to the private or public sector depedig o whether they do maily private work or NHS work eve though, i the Natioal Accouts, they are cosidered to be part of the private sector because they are selfemployed. However, those who are allocated to the public sector i the LFS caot be reclassified to the private sector as they caot be distiguished from others, such as doctors ad detists workig i hospitals that are part of the public sector. Whe makig comparisos i terms of proportios of workers with particular characteristics who are employed i the public ad private sectors, for example, the percetage of employed wome who work i the public sector, as i Tables 2 ad 4, it is importat to make further small adjustmets to the data beyod the reclassificatios described above. This is i order to make the figures more comparable with overall percetages based o the published PSE estimates derived from returs from public sector orgaisatios. The LFS data are thus fially costraied so that the overall public/private sector split is cosistet with ONS s mai published PSE figures. Note that these adjustmets are ot ecessary for cross-sectioal aalysis withi sectors. They have o effect o the estimated proportios of public or private sector workers with particular characteristics, which is the basis of much of the aalysis i this article, for example, the percetage of public sector employees who are wome. 55

CHAPTER 2 PRICING OF BONDS

CHAPTER 2 PRICING OF BONDS CHAPTER SUARY This chapter will focus o the time value of moey ad how to calculate the price of a bod. Whe pricig a bod it is ecessary to estimate the expected cash flows ad