A comprehensive analysis of public sector pay in last week’s medium-term budget documents provides useful context to the conflictual public sector pay talks, with protests due next week.
The public sector unions have gone back on their earlier 6.5% demand and now want 10% increases. The government has said it will implement a 3% increase for the 2022/2023 fiscal year plus a cash gratuity, which finance minister Enoch Godongwana told journalists last week was worth a further 4.5% — so 7.5% in total. The minister has held back from pencilling in an increase for the next fiscal year, so as not to pre-empt the wage negotiations. All of this had been agreed in talks and at the recent public sector summit, he said last week. He had to pencil something into the budget: 3.3% is the number.
Whatever the outcome of this round of industrial conflict, there is an urgent need for a fresh look at the pay structure of the public service, not just at the pay packet for any given year. And as the budget documents suggest, that ought to include the entirety of the public sector, also local government employees, not just the national and provincial employees whom Godongwana’s budget directly covers.
Broadly speaking, during more than a decade of above-inflation increases in the public payroll staffing costs consumed an increasing proportion of public resources, until the government started putting a halt to the trend a couple of years ago. But what emerges from the analysis in the budget documents, which for the first time covers all three spheres of government, is that the problem is much more about wage settlements than it is about the number of people working in public service.
Indeed, since 2015/2016, headcounts have increased on average by just 0.2%, while salaries and wages have grown by an average 6.2% annually. In national departments headcount actually declined between 2015/2016 and 2021/2022 yet spending increased almost 5% over the same period. Provincial headcounts also started to decline, though they rose again when more health and education workers were employed during the Covid-19 pandemic.
Former Treasury budget office head Michael Sachs highlighted the trend in a recent study, pointing to the number of nurses or police per head of population actually declining over the past decade. So core frontline service delivery has suffered — yet the payroll kept ballooning, peaking a couple of years ago at more than one-third of all government spending. And the budget documents show SA’s public sector wage bill is substantially higher than that of its peers and one of the highest among emerging markets.
If the trend of high wage increases but low or negative headcount growth is stark in national and provincial government, it is even more so in local government, where salaries and wages have risen an average 8% but headcount just 1.4%.
Of even more concern is how this has played out in the public service. The above-inflation increases have gone to lower and middle-level employees in the “bargaining unit” who are represented by trade unions and whose pay is negotiated in the public sector bargaining council. Some skilled professionals have been well compensated too. But this has been at the expense of the senior managers who are not in the bargaining unit — when it comes to senior management both pay and headcount have fallen sharply each year since 2015/2016.
Perhaps some of these were superfluous, overpaid bureaucrats. But the quality of service delivery has been affected by the stripping of senior managers and skilled supervisory people from the public service.
Essentially, though the government has managed to pare back the wage bill, it has been done in a dysfunctional way that reflects politics and union power more than it does the real interests of SA’s citizens or a concern about the quality and priorities of the public service.
What is urgently needed, then, is for the government and unions to seek some kind of long-term accord over pay that will put a stop to the annual round of conflict and protect SA’s public finances. But more than that, the whole structure of the public service needs a rethink. The government and the unions were supposed to have embarked on a process of review and engagement . So far there is little to show for it.
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