Like many South Africans, I suppose, I have had two percentages, 7% and 8,6%, on the brain in recent weeks as public sector workers and government knocked heads.
The fallout has been so intense at times, you could be forgiven for thinking that a revolution had broken out rather than just a strike.
The apparent closeness of the two figures, separated by just 1,6 percentage points, suggests perhaps that the dispute could have been amicably settled without unnecessary loss of life and disruption of important activities such as getting matrics ready for their end-of-year exams.
But calculate what a 1,6% difference will add to the budget next year and you start to get a sense of what underpins this dispute.
A release by the Government Communication and Information System shows government will spend R270-billion this year on its employees. If this sounds like a lot, it is. It is one-third of all government expenditure and 47% of current revenue. It dwarfs, for instance, the R80-billion paid annually in social grants.
The 1,6% equates to a R4,3-billion difference on this year’s R270-billion wage bill. Compensation, as government items this expense in the budget, appears to be on a runaway trajectory.
Just four years ago it was R170-billion. Public servants are being paid R100-billion a year more than they were just four years ago. This is expected to rise over the three-year budgeting period to R332-billion in 2012-13, a near-doubling in just six years.
The GCIS release shows that employee numbers have, meanwhile, increased from 1,1-million in 2006 to 1,2-million this year. This means that the average salary for public sector workers has grown from R12749 a month in 2006 to R18028 a month now.
Employee compensation has been more or less unchanged as a percentage of government expenditure in the past three years at about one-third of the budget, but government expenditure has been extremely high between 2002-03 and 2009-10, real growth in expenditure averaging just less 11% a year. “The fact that compensation has not fallen as a percentage of expenditure shows that compensation has grown by similar levels,” says GCIS.
Public sector workers have done very well in the recent times of plenty, but news of difficult times and the fact that government’s cupboard is now bare, is yet to reach them. They want the party to carry on.
Government has in the recent past identified the strong rand as an impediment to growth as it makes exports less competitive. But, with the budget deficit at about 6% (R150-billion) of GDP, in part to prop up public sector wages, government has become a big borrower.
Foreigners are flocking in to buy record amounts of government bonds, pushing up the value of the rand, according to economists. The situation, the GCIS release says, is not sustainable.
It says that in the absence of substantial savings being made available for reprioritisation, higher wages will come at the expense of lower employment in government departments, lower or delayed capital expenditure and/or lower expenditure on goods and services, including education and health.
“Put simply, government will be borrowing money to pay wages and debt-service costs.”
Some strikers have caused mayhem in recent weeks, for instance, turning hospital casualty units into war zones, but more noticeable than the disorder they caused, was the absence of leadership.
Where was the party pooper, the one strong enough to tell them that the cupboard was bare, the party over?