I read with interest the Business Maverick’s After the Bell opinion piece written by Ray Mahlaka, a journalist working for the newspaper, on the subject that government and trade unions representing public servants will soon head to the negotiating table for a 2025 pay deal.
The unions are already turning the screws on the government (and taxpayers) by asking for a 12% pay increase for all public servants, which is higher than the latest inflation rate of 4.6% (10 September 2024), says Mahlaka. However, it is all the other statistics that he gives in the article that are interesting and I quote him:
“The government spends a lot of money to pay the country’s 1.3 million public servants, including, among others, teachers, police officers, doctors, and nurses. Just this year, the government plans to spend R679.1 billion to compensate public servants, an amount that gobbles up 30% of the government’s total expenditure, which is set at R2.3 trillion. In other words, 30% of the government’s expenditure compensates just 2% of the population.”
“This is a problem. It means that government spending is regressive as paying public servants comes at the expense of pro-investment and growth measures (including building roads and other infrastructure).”
“South Africa’s public service is not large but it is unusually well paid. Underscoring this is a report commissioned a few years ago by Business Unity SA, which has benchmarked the pay of the country’s public servants against international norms South African teachers, alone, earn nearly 50% more than the Organisation for Economic Co-operation and Development average, and public servants are better paid than the median SA taxpayer. More recently, the National Treasury released more shocking figures. The number of public servants earning over R1 million per year has increased by 280% from a decade ago. There are 37 800 public servants in national and provincial governments earning above R1 million per year.”
“How did the cost of paying public servants get out of control, going from R154 billion in 2006 to R679.1 billion in 2024? The government has itself to blame because it settled on above-inflation pay increases for more than a decade, making public servants and trade unions accustomed to this largesse.”
However, according to a National Treasury 2023 MTBPS (Medium-Term Budget Policy Statement) document the number of government employees earning over R1 million per year is 55 000 (10 000 in 2013/14). Another 180 000 employees earn between R600 000.00 and R1 000 000.00 per annum – equating to between R50 000.00 and R84 000.00 per month. Almost half of the public servants (48 per cent) were scheduled to earn between the annual ranges of R350 001.00 and R600 000.00 in 2023/24.
631 government employees earned over R1.74 million annually and 117 employees earned over R2.16 million per year. Many of these will have their medical aid, pension, travel and cell phone bill paid and receive performance bonuses. In some cases, they will also have a housing allocation.
By 2026, the public wage bill is expected to increase to R769 billion!!!
Some of the employees earning over R1 million annually include executives at state-owned entities, doctors, school principals, senior management police officials, department heads, directors-generals, directors, chief directors, chief financial officers, and other senior government positions.
The document also reveals that the government wage bill as a share of GDP for 2022 is 13.6 per cent (the OECD average is 10.1%) and comes in at number three in the world, only Iceland and Denmark are above South Africa, and South Africa comes in at number seven in the world for general government employment as a share of total employment with 18.6 per cent. Norway, Sweden, Denmark, Finland, France and Hungary are above.
These are staggering figures and if there are to be 12% increases, as asked for, government and the taxpayers will be put under huge strain.
