Senior Executives in Government Companies and Corporations

15/08/2007 |  Solberg Idit
All Press Releases In Subject:
Welfare Policy and Labor Market
Idit Sohlberg
This study examines the process of appointing senior executives in government companies and corporations and of setting their emoluments, in the years 1994 to 2004. It was found that the directors general of government companies and corporations in 2004 earned five times the average wage in the public sector in that year, and about one-fifth of the salaries of senior executives in public companies in the business sector. About 20 percent of the executives, on average, changed jobs each year, the rate of senior appointments in government companies and corporations fell in an election year, but rose again the following year, providing the new regime with a "useful tool". The average seniority of executives in government companies and corporations was lower than that of their colleagues in the business sector, and declined the higher the rating and complexity of the company.
It was found that most managers who took on senior positions in government companies and corporations came from within the public sector. Those managers remained in their positions for shorter terms than did executives who came from the business sector, and they were employed in relatively highly rated companies. It was also found that the salaries of senior executives in government companies and corporations eroded significantly relatively to the business sector, and, in the same time, there was a concurrent decline in the proportion of executives switching from the business sector to the public sector.
The findings suggest that an attractive salary is not enough to keep good executives in the public sector over time, or to attract senior, highly capable managers from the business sector. The data may also indicate that political considerations play a large part in the process of recruitment of senior staff, and this could have an adverse effect on the effectiveness of their management.
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