What civil servants cost you

2012-11-03 18:02

South Africa’s wage bill among most expensive in the world.

Nearly R12 of every R100 generated by the economy is spent on paying civil servants.

According to the National Treasury, in the past financial year bureaucrats were paid 11.5% of the country’s gross domestic product (GDP), making South Africa’s civil service among the most expensive in the world.

The Russian Federation spends 3.7% of GDP on its civil service, with Brazil’s ranging between 4.4% and 4.8% over the past decade.

Finance Minister Pravin Gordhan admitted last week that the growth in government wages had outstripped all other categories of state spending in the past four years.

European Union and International Monetary Fund figures show that South Africa outspends the UK and the US, and most of sub-Saharan Africa, on its civil service as a proportion of GDP.

Government wages as a percentage of GDP is one of the few ways to directly compare state wage costs across different countries.

Mike Schüssler of economists.co.za estimated, using Stats SA data, that the state wage bill was actually 12.9% of GDP – and could be as much as 14% if state-owned entities are factored in.

In 2011 the state pay packet was R346 billion and this year it is estimated to reach R378.3 billion.

An International Monetary Fund study estimated that South Africa’s civil service cost on average 10% of GDP between 2006 and 2010.

Nigeria, South Africa’s closest ­African economic rival, spent 4%, Egypt 6.9% and Rwanda 3.5%.

Schüssler said in the mid-2000s the state’s wage bill had dropped to 9% of GDP, but then started climbing again.

Economist Iraj Abedian said the labour intensity (the amount of manpower needed to deliver a service), efficiency of civil servants and the size of a country all play a part in national wage bills.

“If a country is large, such as South Africa, Brazil or Canada, the public wage bill tends to be higher than if you’re a small country since the wage bill also depends on how wide you have to stretch yourself and what technology you use.

“Another factor is the productivity of the public sector. If you have a more productive public sector, that obviously reduces the percentage spent on wages.”

Treasury spokesperson Phumza Macanda said comparative data ought to be treated with caution because it “might easily create a wrong or misleading impression”.

“The size of the public service is influenced by a host of factors. Major economic sectors, such as health or education, are administered by the state in some countries, while in other countries they are entirely private. In South Africa many of these large, labour-intensive public services are administrated by national and provincial government.

That said, we are satisfied that in comparative terms, South Africa’s public service is not unusually large.”

The Treasury estimates the public service wage bill compared to GDP will peak next year at 11.6% before dropping to 10.4% in 2015.

Stellenbosch economics professor Estian Calitz said technological advances could make it possible for these costs to drop in areas such
as education, health and defence.

He said: “Salaries of government employees have risen substantially in real terms during periods of rising protest about poor service delivery.

Normally one would expect real increases in remuneration to be coupled with increased productivity.”

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