Public Administration Labor Cost Forecasting and Wage Distribution

The Public Administration model here developed simulates PA wage dynamics on the basis of the last realized levels and a set of economic and normative hypotheses (expected inflation, wage settlements, etc.). The narrow model dimensions do not permit sub-national forecasts; local wage dynamics, not always checked by the central government, may however vary over time and influence the general public deficit, which is a government’s competence. The likely clash between centralized constraints and decentralized dynamics is doomed to grow as a consequence of fiscal federalism and public functions decentralization. Such features are especially relevant for the National Health Service (NHS), due to its intrinsic institutional complexity, the NHS labor costs relevance and the sub-national segmentation of the operational units (local health authorities, hospitals, etc.). The NHS labor cost higher increments correspond to the wage settlements (1990-91, 1996-97, etc.). It is however possible to observe a background dynamic pattern - more evident in the years with no wage settlement effects (e.g. 1992-95) - which arises from various sources: decentralized wage bargaining, personnel seniority and promotions, professional qualifications changes, etc. Such factors affect average wages in a locally differentiated way: they can only be identified by a disaggregated data analysis. However, in order to be useful for the national monitoring and forecasting purposes, such analysis results have to be synthesized by means of a limited number of indicators.