State weighed down by wage pressure

Concern is mounting from the government and economists over the pressure the public-sector wage bill is placing on the state.

Government spokesperson Themba Maseko said the government could not justify large salary increases at present, when faced with other spending priorities such as social grants and infrastructure building.

“Put simply,” Maseko said, “government will be borrowing money to pay wages and debt service costs. This is not only unsustainable but will require future generations to pay for our current spending.”

But the increased pressure on the budget has not deterred public-sector workers from continuing with the strike that has crippled schools and hospitals across the country.

Unions continue to call for an 8,6% wage increase and a R1 000 housing allowance, while the government is sticking to its offer of 7% and a R700 allowance.

Maseko told the Mail & Guardian that while spending on employee compensation — which is roughly a third of revenue — has been stable for the past four years, as a percentage of the tax revenue that the government collects it has risen, going from 35,4% of revenue in 2006/07 to current levels of 47,4%.

Employee compensation, he says, has risen “from 35 cents of every rand we collected in 2007/08 to 47 cents at the height of the economic slump in 2009’10”.

“The issue of the share of compensation must be viewed within the context of government’s objectives and the growth in other priority expenditure areas.

“Between 2002/03 and 2009/10, real growth in government expenditure has been extremely high, averaging just less than 11% a year. The fact that compensation has not fallen as a percentage of expenditure shows that compensation has grown by similar levels over the period.”

Unionised workforce
According to the Government Communications and Information System, the increase in the head count of the civil service has slowed dramatically in the past few years.

In 2007 numbers grew by 4% but by 2009 the increase was only 2%.

The government currently employs more than 1,2-million people and 98% of the workforce is unionised.

“Cost-of-living adjustments well in excess of inflation in 2009 have — reduc[ed] the number of civil servants that government departments have been able to hire in support of improved service delivery,” Maseko said.

The education and health sectors still have the largest number of workers, with more than 490 000 and 279 000 employed respectively.

While social welfare services and justice and constitutional development services have much smaller respective head counts of 16 500 and 20 900, social welfare has seen a 67% growth in employment since 2002/03 while justice has seen a 35% increase.

Meanwhile, the average unit labour costs — the cost of employing someone versus his or her output — across all these sectors has increased.

This year education saw a rise of 10%, social welfare a 16% increase, health went up by 13% and justice and constitutional development increased by 20%.

Private-sector economists have echoed government concerns. Stanlib economist Kevin Lings said while crisis point has not been reached, pressure on the fiscus is building.

Public-sector wages take a “large portion of fiscal costs”, but with the growth in other spending priorities and in light of South Africa’s small tax base, government will have to ask more from taxpayers or widen its budget deficit, said Lings.

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Lynley Donnelly
Lynley Donnelly
Lynley is a senior business reporter at the Mail & Guardian. But she has covered everything from social justice to general news to parliament - with the occasional segue into fashion and arts. She keeps coming to work because she loves stories, especially the kind that help people make sense of their world.
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