ECB Bulletin: Public Services Drive Post‑Pandemic Euro Area Jobs Growth, Employment Share Up 0.8 Points Since 2019

Public services have played an outsized role in lifting overall employment in the euro area in recent years, according to analysis published in the ECB Economic Bulletin (Issue 7/2026). Since the COVID-19 pandemic, hiring in public services has outpaced most other parts of the economy, pushing up the sector’s weight in the labour market. By the end of 2025, public services accounted for a share of total euro area employment that was about 0.8 percentage points higher than in 2019, returning close to the high reached in 2021.

That rising footprint is striking because public services employ fewer than one in four workers, yet they have delivered more than one-third of total employment growth over the past three years. The ECB’s box examines what is behind this divergence—and, crucially, whether it should be read as evidence of an expanding public sector in the narrow sense of state employment.

The first finding is that health and social work have become the engine of job creation inside public services. Over the last three years, employment in “human health and social work activities” expanded by roughly 2% per year on average. That pace is well above growth in “education” (about 1.2%) and “public administration and defence” (around 0.8%). The pattern is not new, suggesting a long-running structural shift rather than a temporary post-pandemic bump.

Looking back over a longer horizon reinforces the point. Between 2008 and 2025, public services employment increased by around 6.9 million people. Nearly 4.8 million of those additional workers—close to 70%—were in health and social work. Education added jobs more slowly, while employment in public administration and defence was essentially unchanged over the period.

International comparisons point in the same direction. Across OECD countries, employment in health and social work has grown at about twice the rate of the rest of the economy over a comparable timeframe, reaching roughly 11% of total employment by 2023. Demographic ageing and the related expansion of care needs are a central force behind this sustained demand, particularly for residential care and other social work activities.

The second finding adds an important nuance: “public services” does not necessarily mean “public-sector jobs.” The analysis stresses that a meaningful share of employment delivering public services—especially in health and social work—is actually provided by employers outside the public sector. In other words, part of what looks like growth in the public domain is, in institutional terms, private or non-public employment responding to rising care needs.

Survey evidence underscores that the boundary differs sharply across public service functions. Using the ECB Consumer Expectations Survey, the authors find that around 85% of respondents working in education or in public administration and defence say they are employed by the public sector. Health services stand out as more frequently delivered by non-public providers than either education or public administration.

This distinction, the ECB argues, reframes the discussion. A growing contribution of public services to job creation does not automatically imply a commensurate expansion of government payrolls. At the same time, the box cautions against equating “private employer” with “no fiscal role”: many privately employed workers in health and care can still be supported indirectly through public funding channels, such as social transfers in kind or long-term care insurance. The results therefore speak primarily to who signs the pay cheques—not necessarily to the overall budgetary exposure linked to delivering these services.

Why it matters

For policymakers and the public, the findings clarify what is driving euro area job growth and why perceptions of a swelling public sector can be misleading. As ageing boosts demand for care, employment may keep shifting toward health and social work—often through private providers operating within publicly financed systems. The next question to watch is whether labour shortages, funding constraints, or productivity challenges in care services become the limiting factor for employment and service provision.