South Africa’s public servants are relatively highly paid compared to other emerging economies, according to the Organisation for Economic Co-operation and Development’s (OECD) Economic Survey for South Africa 2020 released on Friday.
OECD conducts economic surveys for its 37 member states, many of them wealthier than South Africa, every two to three years. “Our goal is to shape policies that foster prosperity, equality, opportunity and well-being for all,” it states on its website.
Its latest South Africa Survey found that the general government wage bill, at 12 percent of GDP, “is one of the highest among OECD and partner countries.” The OECD average is slightly below 10 percent.
“At 38 percent of total consolidated government spending, the compensation of employees was the largest spending item in 2019. In the last decade, compensation spending increased at an average of 11 percent per year, growing at a rate higher than nominal GDP,” the survey added.
In real terms, per capita remuneration in the public sector also rose by 3.1 percent on average annually over the past 10 years. Wage increases were regularly above-inflation.
The Survey said, “The remuneration level of civil servants is relatively high when compared to OECD and other emerging economies. Top managers in the South African civil service earn an average revenue corresponding to nine times of the GDP per capita in 2017, while the ratio is below six for the OECD average.
“Compared in terms of US dollar purchasing power parity (PPP), the remuneration of South African public sector managers is comparable to their counterparts in Norway.
“Even for non-management senior officials, teachers and education personnel, South Africa has one of the highest levels of remuneration both in terms of GDP per capita and US dollar PPP.”
The government has signalled its intention to rein in its wage bill. In February, Finance Minister Tito Mboweni tabled proposals in the budget to reduce it by R37.8 billion in the 2020/2021 financial year, R54.9 billion in 2021/2022 and R67.5 billion in 2022/2023.
However, labour federation COSATU and the Public Servants Association of SA slammed the proposals, with COSATU saying the “battle lines have been drawn.”
The government is seeking renegotiation of a 2018 wage agreement signed by parties in the Public Service Co-ordinating Bargaining Council (PSCBC), a move the unions have strongly opposed in the Labour Court.
In March, President Cyril Ramaphosa said the government’s proposals are part of wider measures to contain public spending and consequently curb runaway government debt.
He said, “Our approach is not to dramatically cut the size of the public service, but to examine the rate at which wages grow. Public service wages have on average increased at a much higher rate than inflation over many years, and we need to fix this if we are to get public finances under control.”
OECD’s Survey recommended indexing public sector wages below inflation for three years. “An inflation minus 2 percentage points in the public service could generate around R30 billion savings over three years,” it said.