Public Sector: Definition and Examples

The public sector is the segment of the economy owned, operated, and controlled by government agencies. It provides services to the general public that contribute to societal well-being, such as law enforcement, national defense, public transportation, transit infrastructure, educational institutions, and health services. Unlike the private sector, the public sector does not seek to make a profit off its services.

In addition to the entities it funds, the public sector implements public policy at all levels of government and includes public services provided by elected officials. It also includes outsourcing of services provided to these agencies. The three levels of government services in the public sector are federal, regional, and local.

Organizations fall under one of three categories: the public sector, the voluntary sector, and the private sector. The public and voluntary sectors share similarities, such as nonprofitability; however, the government runs the public sector while charities and nonprofits run the voluntary sector. The differences between the public sector and the private sector include:

• Efficiency: Private sector companies compete with other businesses offering similar services and understand positive customer experience optimizes profit. Public-sector organizations compete with no other services and gain no profit. Because of these differences, private companies strive to be more efficient than their competitors, while public-sector agencies tend to be less efficient.
• Employee pay and benefits: Public-sector employees work under various civil service employment systems, ensuring equal pay for equal work. If you’re a private sector employee, your employer determines your pay and benefit rules, and, as long as they’re following employment laws, they can do as they wish.
• Funding: Taxpayers fund public sector enterprises through government budgets, while investors and shareholders fund private-sector organizations.
• Goods and services offered: Public goods and services provided by the federal government or local government provide an equal benefit to everyone in society. Private goods and services only benefit the individuals or companies that can afford to purchase them.
• Ownership: The public, via elected government officials, “owns” public sector organizations, while individuals, companies, and corporations own private sector organizations.
• Profitability: Private companies seek to profit, while public sector organizations function outside a profit-driven economic system, seeking to serve societal needs only.

The public sector provides essential support and services to society, creating a foundation for peace, economic growth, safety, and a sense of community. Public-sector services ensure that there are workers to put out fires, repave roads, deliver mail, as well as ensure your social security check arrives.

Public sector services aren’t just for certain people, but for all people. They supply a safety net for those who need extra support due to poverty, sickness, disability, or old age. The public sector works under the premise that if you take care of those in need, everyone and everything will thrive, including the economic development of the private sector.

Public-sector services vary widely from country to country. In many European countries, the public sector covers the costs of healthcare and higher education. In some communist countries, the public sector widens further, including the media and entertainment industries.

Taxpayer dollars, fees, and federal financing to smaller provinces fund most of the budget for public services. Over the years, changes to the public sector have led to privatizing and outsourcing public services. In some cases, a hybrid public-private partnership offers public sector services.

The public sector covers a wide variety of organizations offering a multitude of services. Some examples include:

1. 1. Educational institutions: Public education such as elementary schools, middle schools, high schools, colleges, and universities provide government-funded free or low-cost education.
2. 2. Emergency services: Fire departments, law enforcement organizations, and healthcare facilities such as hospitals and clinics may receive government funding.
3. 3. Postal service: Mail delivery and all other services provided by the post office belong in the public sector in the United States.
4. 4. Public utilities: Water, gas, electricity, trash disposal, and sewage services often follow a public or hybrid public-private model.
5. 5. Social services: Disability services, financial aid, food banks, public housing, and health care options assist those who need it.
6. 6. Transit infrastructure: The public sector includes public transit frameworks, such as the building and upkeep of airports, bridges, roads, and public transportation such as buses and subways.

Get the MasterClass Annual Membership for exclusive access to video lessons taught by the world’s best, including Paul Krugman, Doris Kearns Goodwin, Ron Finley, Jane Goodall, and more.