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Mail & Guardian
22-05-2025
- Business
- Mail & Guardian
Public sector wage bill must be contained – but not by DOGE methods
Public sector wage bill 2023 The government of national unity (GNU) has experienced major ructions since the country's 2025 budget was aborted in February. Although the budget deadlock was about VAT, it is a symptom of a bigger problem affecting the fiscal sustainability of the country's public finances. This has exposed rifts between political parties over how best to increase revenue and cut expenditure. One of the biggest contributors to the government's precarious fiscal position is what the state pays public servants. The public sector compensation budget, or 'wage bill', has increased pressure on the government's available revenues. This has been constrained by sluggish economic growth and significant debt-servicing costs. According to the treasury, the wage bill has nearly doubled as a share of GDP from 1994 to 2024. It might be tempting to try to control the wage bill by cutting the public sector workforce in the absence of realistic short-term prospects for significantly increasing revenue. But this comes with considerable risks and disruption to service delivery capacity, which must be mitigated if not avoided entirely by affordability concerns. As the finance minister prepares to present a revised budget this week, the GNU must plan boldly in the medium-term to alleviate the fiscal stress caused by the wage bill. But it should not pursue indiscriminate cuts in core service areas and instead focus on eliminating wasteful and superfluous expenditure that has created structural imbalances in the public sector workforce. Recent events in Washington offer lessons about the dangers of acting boldly but irresponsibly when managing the cost of the public sector. Under the department of government efficiency (DOGE), the Trump administration has set about firing tens of thousands of workers. The highly controversial actions have drawn wide criticism. The US federal bureaucracy has, for years, endured successive rounds of efficiency and performance reforms under various presidents. The broad mission of DOGE is therefore not unusual. What is unusual is the increasingly malicious and disparaging image of a wasteful bureaucracy that the Trump presidencies have created. The aggressive methods employed by DOGE, which has instituted deep cuts across the US federal government workforce, spending programmes and entire agencies, have caused massive disruption in the delivery of services, and unleashed panic and fear among civil servants. Nevertheless, there are also pockets of bi-partisan support for the general principle of reducing waste, inefficiency and streamlining the structure of government. Does the underlying reform spirit in Washington, as opposed to its harmful methods, offer any lessons to South Africa in controlling its public sector wage bill? Trend Salary increases have been the biggest driver of payroll costs compared to increasing the total number of public servants. Although this has disproportionately benefited public servants in core service areas, like medical and criminal justice professionals and educators, it hasn't improved the overall capacity of these key frontline professionals, whose total numbers have stagnated in recent years and failed to keep up with the demand for the essential services that they provide. This problem was laid bare during acrimonious negotiations between public sector unions and government during Adopting a bold approach to alleviating the pressure of the wage bill can be implemented in ways that don't have to compromise the public sector's capacity to deliver essential services. This could include: Re-allocating spending which has fuelled growth in the number of workers in non-core areas of the public sector. This includes public entities and state-owned companies, as well as ministerial office staff and central government personnel working in policy planning, oversight and regulation Reducing excessive spending and reliance on outside consultants. This has been More aggressively (but creatively) reducing the number of government departments and public entities and forcing departments to rationalise their internal structures. There is already broad multi-party support behind cutting the size of government — President Cyril Ramaphosa But there may be little appetite in a more politically diverse GNU to embark on bold cuts to the machinery of government. Conversely, the GNU might provide political adversaries with a unique co-governing platform to finally reconcile their differences over the size of the state. Efforts to control the public sector wage bill should not be driven by an overzealous, indiscriminate and pernicious cutting of 'wasteful' bureaucrats, as the recent experience of DOGE has shown. Instead, the GNU should be seized by the magnitude of the fiscal crisis to act boldly but responsibly to create a more constructive pathway to balance affordability with capacity. VinothanNaidoo is an associate professor in public policy and administration at the University of Cape Town.
Al Jazeera
08-05-2025
- Business
- Al Jazeera
Will African nations ever be able to repay their debt?
Africa is a continent rich in natural resources with a young population. African nations in theory have the potential to transform their economies. But many of them are facing mountains of debt. Africa's external debt climbed to more than $650bn last year. More than half of African countries are either in debt distress or teetering on the edge. But credit restructuring is painstakingly slow, and many governments end up spending more on servicing their debt than on healthcare or education. The debt problem has plunged many nations into economic crisis with rising unemployment and poverty.
