Difference Between Private and Public Sector

The private and public sectors are needed for the development of the nation as it eventually leads to the rise of the GDP of a nation.

It is either under the control of the government or of individuals who might be business magnates. Both these sectors increase the job opportunities in a country, which indirectly leads to a better lifestyle and habits.

Private vs Public Sector

The main difference between the private and public sector is that the private sector is usually owned and controlled by individuals who might or might not be citizens of that nation. On the other hand, the public sector is under the supervision and control of the government and its employees. The ownership, in both cases, decides the success rate of the organization or company.

Private vs Public Sector

The private sector is solely in control of individuals who have set up firms and brought in better job opportunities for the population with high salaries.

The educational qualifications of each candidate who applies for a job in the private sector are highly important and will determine their positions. People prefer to work in the private sector because of the high salaries and incentives.

The public sector refers to the organizations that fall under the government. Employees get many incentives and privileges that are absent in other sectors.

To get a job in any public sector firm, individuals have to qualify for both the exams and interviews provided either by the company or the government.

Comparison Table Between Private and Public Sector

Parameters of ComparisonPrivate SectorPublic Sector
Need To Pay TaxesYesNo
Only Aim Is to Gain ProfitYesNo
Has To Attend Exams to Attain a JobNo  Yes
Has CompetitionsYesNo
Owned ByPrivate organizations and individualsGovernment

What is Private Sector?

The formation of private-sector organizations could either be through the privatization of public-sector firms or through individuals who set up enterprises at their own risk.

Private sector firms run solely to gain profit and attain several shares in other companies or the stock market.

It could either be small startup businesses or even large chains of restaurants or hotels.

Most of the established companies in the private sector usually have smaller branches in towns and villages with a marginally higher GDP.

They aim to provide the best possible service to their customers.

Competition is high in the private sector as all the individual companies belonging to the same field want to be at the top.

Even within each enterprise, the employees all perform their best to gain promotions and further incentives such as accommodation and health coverage.

Organizations under the private sector would have to follow all the rules of the government.

They have to follow all the rules as per the Constitution that link to their respective fields of business.

The employees of the private sector at times have no job guarantee. This might lead to instability.

All those working in the private sector try to be the top performer in a specific office, as merit and performance would lead to further promotions and a job guarantee.

Private companies, such as pharmaceutical companies, have been known to engage in unethical practices such as selling illegal drugs to increase profits.

This is one reason the government keeps a keen watch on the proceedings of such private-sector enterprises.

Some private-sector enterprises include schools and other educational institutions, banks, construction companies, and much more.

What is Public Sector?

Public-sector enterprises are all those that come under the direct and watchful eyes of the government of a country.

The main objective of all public-sector firms and organizations is to provide services to the citizens for a small fee or for free.

All government services, such as government hospitals, government schools, etc., fall under the broad umbrella of the public sector.

Public sector enterprises do not have to pay taxes and other similar funds to the government.

Being under the control of a government organization does not mean it is all a single circle of owners.

That is there are different tiers of government which include the Central, the State, and the Local body. 

Each level of government controls the public sectors that fall under them.

The funds to run such public-sector enterprises come from the taxes and other money gained from the public.

To get a job in a public-sector organization, one has to pass exams and different levels of interviews.

There is a job guarantee for all the employees employed in public-sector enterprises.

Many incentives like pensions and other retirement benefits, accommodation, food, and sometimes even travel expenses are given to the employees.

Seniority is what paves the way for promotions and higher salaries, along with a wide range of incentives.

The greater the employee’s age, the higher their position. But this isn’t the case at all times. There are many exceptions.

A few of the public sector firms include post and courier services, railway services, other public transport services, etc.

Main Differences Between Private and Public Sector

  1. While the private sector is owned and maintained by private owners and individuals, the public sector is solely under the government of a country.
  2. The private sector has no levels of governance or owners, whereas the public sector has three tiers of governance.
  3. Employees are promoted based on their performance and merit in the private sector, whereas in the public sector, they are promoted based on their age and seniority.
  4. Private sector organizations earn their income and funds through investments and sales, whereas public sector organizations gain funds through the government in tax.
  5. The private sector cannot provide services such as postal and railway transportation, whereas the public sector can.
Difference Between Private and Public Sector


Both the private sector and the public sector are needed for the smooth development of a nation.

These days, people tend to opt for services provided by the private sector as they are believed to be of better quality and have greater value.

In the case of job guarantees, it is the public sector that is ahead. People keep repeating the exams to gain entry into the private sector year after year.

With proper educational qualifications, everyone can obtain a job in both sectors without much hassle and can go higher up in positions.

The workload in the private sector tends to be greater than what the employees are paid for at times.

Corruption and bribery would be rare in the private sector as it does not hold great power over things such as land acquisitions, etc., which are often carried out through bribes.


  1. https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1540-6210.2006.00620.x
  2. https://academic.oup.com/jpart/article-abstract/16/2/289/908278
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