The cabinet’s decision to offer public servants early retirement in a bid to trim the wage bill is a terrible idea.
It risks losing the very people the government should be holding on to, weakens institutional memory and leaves the public at the mercy of junior staff. And it avoids the politically fraught task of making radical changes to the organisational structure of the government and reviewing the generous benefits it accords its employees.
Previous schemes to save money by shedding public servants backfired spectacularly: the education sector lost some of its best teachers when Nelson Mandela’s administration offered them early retirement in the 1990s, and a plan launched in 2019 to hive off 30,000 older mandarins saw only a few thousand take up the offer.
The details of the latest plan — announced in the medium-term budget policy statement (MTBPS) last week — will only be revealed in the February budget. But at this stage it looks singularly uninspired, and more like a revival of the limp 2019 project than anything truly new: the cabinet has approved an R11bn package to provide penalty-free early retirement to public servants over the age of 55, in the expectation that they will make way for younger and cheaper new hires.
The Treasury used the MTBPS to drive a message that SA’s wage bill has ballooned over the past 15 years and is now high relative to its economic peers, standing at 13.6% of GDP compared to the Organisation for Economic Co-operation and Development (OECD) average of 10.1% of GDP. Part of the reason for this lies in the implementation of a policy known as the “occupational specific dispensation” that was aimed at retaining skilled professionals in the wake of the 2008 financial crisis. But the government is also suffering from the compounding effect of a series of higher than inflation wage settlements that it reached with unions over the years.
Both the health and education sectors are already staring at a looming retirement wave, with large numbers of nurses and teachers set to exit the system in the next few years. Half the public school teachers are due to retire in the next decade, and a similar proportion of nurses are set to do so over the same period. Hastening that process risks doing tremendous harm, as the people most likely to leave are those who are the most competent and able to find alternative employment in the private sector.
Instead of banking on the unlikely prospect that a rush for the door by silver-haired public servants will yield significant savings, the government should be taking a cold, hard look at its own organisational structure. Despite President Cyril Ramaphosa’s oft-repeated promises to reduce the size of the executive, the government of national unity (GNU) has one of the world’s biggest cabinets, with 34 portfolios.
There are 75 ministers and deputy ministers, each with their own costly bureaucracy. Along with this bloated political structure comes a swathe of national departments, each with their own steady proliferation of generously remunerated deputy directors general and chief directors. Taking a scythe to this colossus would be a good start.
The more difficult task then lies in reviewing the salaries and benefits enjoyed by public servants represented by powerful unions, and finding a better way to strike the balance between fair remuneration and an affordable workforce capable of delivering the services SA’s citizens need.
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