Not everyone is sharing the pain

As many South Africans emerge from lockdown without jobs, or with smaller salaries, some public servants are insisting on increased wages. Can their cause be justified? 


The National Education, Health and Allied Workers’ Union (Nehawu) called for a national strike on 3 September (the day after this issue of finweek went to print) by its 240 000 members. They’re demanding that government withdraw its pay freeze on government employees and supply enough personal protective equipment (PPE) to members on the frontline of the pandemic.

“(W)orkers are extremely angry at the poor pace of transformation and government’s inability to improve the lives of public servants, including freezing their wage increase by reneging to the implementation of Resolution 1 of 2018 while watching the elite benefitting from the proceeds of corruption through PPE tenders and supply of other Covid-19 essentials,” Nehawu declared when they announced the planned strike.

The Public Servants’ Association (PSA) and its 240 000 members justify the increases as government employees were at the forefront of fighting the coronavirus pandemic.

“It would be unfair to expect a pay cut from the yoked public servants who have carried the country through the Covid-19 (pandemic) and ensured the fight against the pandemic remains solid and victorious to the end,” Reuben Maleka, assistant general manager for members’ affairs at the PSA, tells finweek.

Many public servants, including doctors and others, even lost their lives and their families are left destitute, he says. “Then how can one expect public servants to sacrifice their lives, much less salaries?”

Government employees take up around 12% of South Africa’s GDP, according to the OECD.

Then this demand for further pay increases, when 3m of their fellow South Africans have lost their jobs as a result of the coronavirus pandemic. Against this backdrop, it can become difficult to commiserate with their demands.

How well-paid are government employees when compared with, say, financial services workers? A very blunt measure to determine this, is to take an institution’s total payroll and divide it by the number of people in its employ.

The government’s salary bill is estimated at R638.9bn for 1.2m employees this year, equating to an average of R532 417 per employee per year (R44 368 a month with no 13th or 14th cheques).

Now compare this to some of our banks’ average payrolls. Standard Bank, the largest bank on the continent, paid R34.5bn to 50 691 employees in its previous fiscal year through 31 December. That’s an average pay of R681 659 per employee per year (R56 804 per month). Absa paid its 38 472 staff members R26.2bn last year for an average of R682 626 per employee per year (R56 885 per month). Nedbank paid R17.3bn to 29 403 employees for an average per-person pay of R589 124 a year (R49 093 per month). Capitec averages R298 766 per person a year (in total R4.35bn paid to 14 590 staff members).

Thus, government employees’ pay, in relation to their efficiency, compares well with the private sector. Another measure to employ is dividing the total revenue of an institution by its number of employees to see what the turnover per staff member is.

The government (excluding borrowing) is estimated to receive R1.09tr this year, according to its supplementary budget review. That translates to R915 833 worth of turnover per employee. Again taking the banks as an example, Capitec’s ratio is R1.14m of operating income per employee, Standard Bank’s is R2.48m per employee, Absa’s is R1.88m and Nedbank’s is R1.7m. That gives the banks roughly, on average, an operating income of R1.8m per employee. Relating this  back to the public sector wage bill, it means that almost half of all government jobs are unnecessary, were these employees to have the same productivity as staff in the banking sector.

Maleka, however, points out the problem regarding an average-pay measurement (and not the one relating to productivity in the public sector). “(The) public sector refers to all three spheres of government, including state-owned entities (and) therefore the focus should be on the equalisation of salaries across all spheres of government,” he says.

Similarly, directors general of government departments and municipal managers receive high salaries compared with other employees under their management, according to him. “That should be addressed (rather) than giving the impression that public servants are the highly-paid employees without giving the correct context that (CEOs of) SOEs and (municipal) salaries are above the public service pay range,” Maleka says.

However, in settling the wage dispute between the government and the unions regarding public sector
pay increases, Maleka certainly has a point: “The main problem to the fiscus is not salaries; corruption, maladministration and financial mismanagement are the enemies of the fiscus.”

Read more
This article originally appeared in the 10 September edition of finweek. To read the full story, you can buy and download the magazine here.

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