Fringe benefits: comparison of public & private sector employment in US states with implications for Armenia

Abstract

The current policy internship project that was conducted at the Ministry of Finance of the Republic of Armenia presents a comparison of public and private sector employment of the US states with implications for Armenia, and explores the role of fringe benefits in the remuneration system of the two sectors – public and private. In the introductory part of the current research the aim of the policy internship paper is discussed and the research questions are presented that the paper aims at finding answers. In the literature review sector several policy papers and survey research are discussed referring to both comparison of public and private sector employment, and the role and the appropriateness of fringe benefits in the compensation package of the employees. Next come findings and analyses part of the paper that compares in details the public and private sector compensation methods of three US states, and then Armenian compensation system of two sectors is compared. From the analysis of the findings it is revealed that fringe benefits play an important role in the distribution mechanism of the two sectors’ compensation of the US states. Fringe benefits appear to be a tool for the US states to cover the wage gap between the public and private sector employees. In Armenia compensation package does not include fringe benefits as a result of which the Armenian public sector employees’ remain under compensation. The last section of the policy paper brings some conclusions on the compensation systems of US states and Armenia and gives policy recommendations for Armenia. Particularly, it stresses the need for inclusion of fringe benefits in the compensation system of Armenia to equalize public and private sector employees’ remunerations.