The South African government employs more than two million people at national, provincial and local level, so of course that’s going to cost us.

When you get hit with the total figure, though, I’m willing to bet you’ll be shocked.

Go on, what does our government spend per annum on their wage bill? Take a guess.

According to new data published by the Institute of Race Relations (IRR), the government wage bill comes in at a whopping R587 billion. Not only is that a monster figure, but it also accounts for close to a third of the entire annual budget.

That’s a problem for a number of reasons, outlined below by Business Tech:

…it’s fast becoming the single-biggest problem in the budget – siphoning funding from other vital functions, like service delivery…

National Treasury has warned that the size of the public sector wage bill needed to be reined in as departments were starting to hit their “compensation ceilings”, noting further that public sector wages had increased 10.3% annually since 2009, significantly higher than the rate of inflation.

According to the IRR, annual increases in public sector salaries have largely outstripped nominal GDP growth for the better part of the last decade, and have often been much higher than even the private sector in South Africa.

In essence, government – which employs over 2 million people on the national, provincial and local level – is spending more on wages than the economy can keep up with.

Kiff.

The responsibility for curbing this expenditure, and trying to reduce that clearly bloated wage bill, now lies with Cyril Ramaphosa and his team.

Once again, that means our new president is going to have to dance along a tightrope:

The president has to toe a fine line, the IRR said, to avoid a war with the unions – while also being cognisant of how international interests, like the ratings agencies, will be closely analysing the outcomes of negotiations.

“The current round of wage negotiations represents a critical test for the Ramaphosa administration. How much remuneration grows, and how much it grows above inflation, will be a determining factor in his ability to turn the economy itself around,” the IRR said.

I guess Cyril is going to have to get used to plenty of juggling in the foreseeable future, because he won’t get to play by his own rules for quite some time.

At least he seems to be unanimously popular on those Sea Point Promenade runs…

[source:businesstech]