Pay Differentials Between the Private and the Public Sector in the Netherlands

Abstract

This article reviews the results of an investigation into public- and private-Abstract sector pay that was recently carried out in the Netherlands. The methodology is unique because the study includes aspects of compensation other than the paycheck and because it measures compensation both on the job and after disability, unemployment, and retirement. Moreover, pay differentials arising from determinants not connected with the job are reduced by standardization. As a result, "standardized "people in comparable jobs are compared. The study concludes that approximately two-thirds ofgovernment workers earn less than their private-sector counterparts, while this pay gap increases according to job level. However, a trade-off seems to exist between pay on and off the job, because the pay gap in the active period is partly compensated for by higher compensation in case of unemployment of public-sector workers.