This study was motivated by the mutual interest of CPD and the West Africa Region in the social, economic and financial importance of public sector employment and wages in the Senegalese economy. Its objective was to describe and analyze the appropriateness of Senegal's pay and personnel policies in both the civil service and the public enterprises, in the light of the crisis in public finance on one hand and the crisis of educated unemployed on the other. Most of the paper is concerned with the facts and institutions of the modern-sector labor market, especially as they affect and are affected by employment and wages in the civil service and (with much greater information limitations) the public enterprises. Civil service pay and personnel policies are found to be excessively personalized at the hiring stage, and thereafter excessively rigid, encouraging rent-seeking while discouraging initiative. Much of the rapid increase in the wage bill in recent years can be explained by changes inthe composition of civil service employment, on such dimensions as grade level, average educational attainment and average age. The policy conclusions are not sanguine. As is true in most Third World countries, Senegal's civil service is found to be too costly in the aggregate even though individual employees are underpaid relative to their coequals in the private sector. This paradox implies that a reduction in the rate of growth of the government wage bill via real wage declines will be hard to implement, and that only serious attention to the problem of numbers of employees will have any lasting effect.