Local government pay rose by 53% between 2006/2007 and 2009/2010, while municipal employment levels rose just 4%, it emerged on Wednesday.
At the release of the Local Government Budgets and Expenditure Review, the treasury revealed that, during the period under review, municipalities’ aggregate spending on employees’ remuneration ballooned from R30.6-billion to R46.7-billion.
At the same time, employment levels rose only marginally, resulting in a “very significant increase in the average cost of employment”.
Wages are expected to rise by a further 7.1% on average in the near future, reaching R57.3-billion by 2012/2013.
But, while large metros are seeing the highest demands on services as a result of rapid urbanisation, it is at district municipal level and in rural areas that pay appears to be out of kilter, according to the review.
While pay for senior managers and chief financial officers in metros appeared to be in line with the expertise, experience and skills required, the treasury noted that the pay packages for senior managers at district municipal level were “unreasonably high”.
In rural municipalities, the increase in personnel costs was above the average growth rate and was accompanied by a decline in employment.
Municipalities of all kinds were simultaneously battling high vacancy rates, particularly in sectors critical to service delivery, the review revealed.
In large metros, vacancy rates in waste-water management stood at just under 48% in 2009, while there was a 33% vacancy rate in electricity services. District and local municipalities suffered vacancy rates in these sectors of just under 24% and 20% respectively.
Below capacity
Overall vacancy rates in metros stood at 25%, while at local and district level, the rate was 36%, suggesting that municipalities were operating at “significantly below capacity”, the review said.
The treasury pointed to a number of explanations for the slow growth in municipal employment. Outsourcing activities were on the increase as a “cost-effective method of delivering services, especially given the rising cost to municipalities of employing staff directly”. Other factors were financial pressures resulting from problems with revenue management, over-ambitious capital programmes, high wage increases and hikes in bulk electricity prices.
In addition, there were difficulties in recruiting and retaining qualified staff due to a shortage of skills and a rigid approach to employment equity. Many people with the necessary skills were reluctant to work for municipalities because of the politicisation of municipal workplaces, the report noted.
As a result of increased costs, including salaries, municipalities had become increasingly dependent on grants from the national government to fund capital expenditure, which the treasury called an “unsustainable trend”.
Local government was engaged in too much “non-priority spending”, failing to save a potential R27-billion in the 2009/2010 financial year.
Non-priority spending included sponsoring beauty pageants, sports and music festivals; public relations projects such as commemorations, voter education and advertising; excessive catering; luxury office accommodation and furniture; excessive perks on mayors’ cars, houses and cellphone allowances; costs associated with long-standing staff suspensions and legal costs associated with dismissing staff.
Finance Minister Pravin Gordhan said there was a growing emphasis in the government on stamping out corruption and financial abuse, and professionalising civil servants.