Fresh thinking needed around wage bill

Mmegi Editor | Wednesday July 16, 2014 11:43

This was motivated by recognition that not only was the amount spent on salaries unsustainably high, but the size of the public sector itself was too big for an economy of Botswana’s size.

Since the 2008 financial crisis, public sector pay rises have been minimal, leading, in part, to the “Mother of All Strikes” of 2011.

There have also been restrictions on the expansion of public sector employment leading to a mere three percent increase in total employment in the past three years.  However, statistics show that the numerous efforts to cut the government wage bill or at least restrain its growth, have failed to bear fruit, with the actual wage bill rising by 57 percent to P14.55 billion in the period 2010-2013.

Adjusted for inflation, the spending still rose by an unsustainable 26 percent.

While public servants have not been awarded a significant salary adjustment in the past five years, it appears the ballooning of the wage bill has been a direct result of higher notching as individual employees move up the salary scale.

 The average personal emoluments paid to public sector employees rose from P6,094 per month in 2010 to P9,253 per month in 2013, an increase of 52 percent. At 15 percent of the Gross Domestic Product, the public servant wage bill remains one of the highest in any middle-income country.

Mauritius, often cited as an equal to Botswana in terms of economic development and prudent macroeconomic management, has a wage bill which stands at just six percent of its GDP.

 The failure to reduce or restrain the wage bill has been a double blow for government as it has not only failed to save money but has also, in the process, managed to irritate its employees leading to poor labour relations and reduced productivity.

 Results of a 2013/14 public servants staff perception and customer satisfaction survey show that job satisfaction and morale have taken a dip in the past four years largely because of the lack of a significant pay rise. According to the survey, overall public servants perception has declined between 2009 and 2013 with 37 percent of employees saying that they dislike their jobs.

With the intention of containing spending on salaries clearly not achieved, fresh thinking is needed on how to achieve the longer-term objective of downsizing the government wage bill.

As has been advised by the IMF, we urge the government to articulate a clearer set of measures to reduce the wage bill relative to GDP.

We suggest that authorities need to put in place measures that include rationalising the size and structure of government, tightening the link between pay and performance and revising the wage scale while strengthening the existing outsourcing initiatives as a long term strategy.

                                                         Today’s thought

                “If you always do what you always did, you will always get what you always got”.

 

                                                          –Albert Einstein