ECONOMIC

use of resources. In such instances the overall ability of the economy to growmay be affected negatively.One element in the rise in government spending has been the increasingclaim of the public sector on labor over time (Table 28). In some casesTABLE 28.—Private and public employment in selected industrial countries, 1960-75Sector and country1960Percent of total civilian employment1965 1970 1972 19741975Private sector:United StatesCanadaJapanFrance .GermanyItalyNetherlandsSwedenUnited Kingdom_88.2192.597.191.389.891.078.186.993.196.989.889.090.977.685.893.196.888.488.289.890.191.074.985.593.096.687.887.488.789.390.371.885.393.096.487.386.788.488.92 90.273.682.696.286.985.471.8Public sector:UnitedStates . . . _CanadaJapanFrance - .GermanyItalyNetherlandsSwedenUnited Kingdom 311.817.52.98.710.29.021.913.16.93.110.211.09.122.414.26.93.211.611.810.29.99.025.114.57.03.412.212.611.310.79.728.214.77.03.612.713.311.611.12 9.826.417.43.813.114.628.21 Data for 1961.2 Data for 1973.a Includes public corporations.Sources: Organization for Economic Cooperation and Development and national sources.a shift of labor to the public sector has been part of a general change inresource allocation that, as noted above, has been conducive to—or atleast has not hampered—overall growth. But sometimes it has led to increasedinflationary tendencies, particularly in countries where the governmenttends to be a wage leader. This appears to have been a problem, especiallyin the United Kingdom in the early 1970s and in France during1976.In a more indirect way government policies may have influenced wageformation and price pressures through the timing and extent of increasesin social insurance contributions. When such contributions represent alarge, and in some cases rising, share of total employment compensationthey may create problems. These problems, however, do not lie in the programsthat are financed but in the fact that in wage negotiations workersdo not normally regard employers' contributions to social security fundsas a part of compensation. To the extent that unions in a numberof countries have begun to negotiate on the basis of after-tax compensation,rising contributions by employees have also added to wage demands andthus to price pressures. The need to increase contributions to social insuranceprograms has become apparent in a growing number of countries as recessionand inflation have reduced surpluses or have increased deficits of social112