Public Sector Vs. Private Sector: What’s The Difference?

Business Terms

There are pros and cons to choosing a job in the private sector as opposed to the public sector. When deciding what type of career you want, it’s important to consider whether it’s likely to fall in the private sector or public sector – and whether or not it may cross over.

The two terms are often used in the vernacular, particularly to describe when someone changes jobs. However, there aren’t necessarily a lot of contexts when it’s being discussed, so it may not be entirely clear what the differences between the two are.

The simplest way to describe the difference is that the private sector works for a business, while the public sector works for the government. There is a little bit of overlap between the two, of course, and the government in question doesn’t have to be federal, either. It can be a state government or a local government as well.

Key Takeaways:

Public Sector	Private Sector
The public sector involves organizations and personnel paid for by government funding, be it federal, state, or local.	The private sector involves organizations and businesses funded by their own profits or by investors.
Jobs in this sector tend to be more reliable and have solid benefits.	Jobs in this sector are less relatable, with less solid benefits.
Wages in the public sector tend to be low.	Pay in the private sector is higher, especially in highly sought-after positions.
Examples include military personnel, police officers, politicians, and park service employees.	Private sector employees can work in any industry, save for those reserved especially for the government, like the military (though there can be contractors), policing, or other public services.

What Is the Public Sector?

In simplest terms, the public sector is an umbrella term for government jobs. This doesn’t necessarily mean the Secret Service or working for the State Department – though they are public sector jobs – but can include any government-controlled business or position.

The primary factor in the public sector is that the purpose of the institution isn’t to make a profit. The people who work there are paid enough to support themselves – and for the amount of responsibility they take on – but there isn’t any overhead or profit that goes to the owners.

Any money the organization might make (which isn’t guaranteed) will return to the general coffers to fund the business practices and employees’ salaries.

There are many possible examples, including the Post Office, a government-employed building inspector, public health worker, or a police officer. There are also many bureaucratic positions, such as accounting, management, or compliance.

Any military, police, or firefighting position (unless it’s a volunteer department) is going to be paid by the government – be it federal or local. That makes it inherently a public sector position. And, of course, the most well-known members of the public sector are politicians.

Like all of these jobs, they are paid by the government that they serve. For the majority of local politicians, their salary is an important way to support themselves in their chosen careers.

As a rule, public sector jobs are less lucrative than private sector ones. However, they’re often known to have excellent benefits packages – usually including a pension – as well as more stability. As a rule, you’re very unlikely to be laid off from a government-paid position, partly because a fair number of them are union.

Many people who work in the public sector also get a sense of fulfillment in the job, even if it isn’t classically glamorous, as they’re working for the public good. This is most obvious in the more well-known positions, such as firefighter, police officer, politician, or diplomat, but everyone in the public sector ideally works for the betterment of the nation and populace.

What Is the Private Sector?

The private sector consists of private businesses. The majority of these businesses (with the exception of some nonprofits and not-for-profits) are to make money. While there’s nothing inherently wrong with this goal, it is markedly different from that of the public sector.

All the well-known companies, such as Target, Walmart, Amazon, and Ford, are all part of the private sector. It should be noted that just because a company’s purpose is profit doesn’t mean that it doesn’t provide a useful or necessary service – that’s often how they make a profit.

Due to the primary purpose of such companies being to make a profit, private-sector employees usually get paid higher wages than public-sector ones. The benefits often aren’t as good, though it depends on where you work and whether or not it’s unionized, and it isn’t as stable.

Companies of this sort are beholden to their stockholders, which means that fluctuations in the market can have a large impact on their profits and business model. That can lead to layoffs or restructuring, which can cause workers to lose their jobs or be dropped to a lower-salary position.

As there usually isn’t a sense of working for the greater good when in the private sector, many employees are less loyal to their workplace as well. It’s much more common for private sector personnel to job hop than public sector ones.

Business Terms

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Author

Di Doherty

Di has been a writer for more than half her life. Most of her writing so far has been fiction, and she’s gotten short stories published in online magazines Kzine and Silver Blade, as well as a flash fiction piece in the Bookends review. Di graduated from Mary Baldwin College (now University) with a degree in Psychology and Sociology.

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