The Botswana Federation of Trade Unions supports the International Monetary Fund’s recommendation that Botswana should reduce its current wage bill, primarily because it would reduce income inequalities.
For too long now, the IMF has been pestering the Botswana government to reduce its wage bill and the United States-based institution apparently wants that done in a New York minute because it makes such calls every opportunity it gets. In its 2012 country report on Botswana, the Fund says that the country should streamline the system of non-wage payments.
BFTU’s Secretary for Publicity and International Relations, Edward Tswaipe, believes that properly undertaken, such streamlining would help curb the “looting” of public funds by a clutter of fat-cat managers and board members in what are mostly loss-making parastatal organisations.
He says that these organisations are some of the “most effective conduits” of wage income inequalities, not because they employ a lot of people or pay them well but because their pay structures have been designed to benefit very few. He adds that the typical employment data of these organisations shows that the bulk of employees are in administrative, general services and industrial sectors, who while usually not enjoying such allowances, would be the group that drives performance and results.
“Actually [parastatals’] total employment stands at 14 000. Those which are not commercial in nature basically serve as an instrument of unequal distribution of income from the state to a small group of households. Some studies by Human Resource companies have revealed that non-wage income paid to top managers has been growing – so it has become a big proportion of total pay for individual managers at the top.”
On such basis, Tswaipe asserts that trade unions should support a regulation of non-wage income to top managers in state corporations. He adds that the current arrangement violates the “clean-pay” concept which is touted as the best practice remuneration strategy globally.
“As the name implies, the unsustainable growth of “unclean pay” in parastatals is a legal form of indirect looting of the public purse as it circumvents the pay cap set by government. It also makes a mockery of the fiscal rule as it is hidden from the scrutiny exercised on the government wage bill. As a result, unfair attention is given to inequalities of pay in the public service while state enterprises silently get away with murder. Unions should not support this,” says Tswaipe whose day job is lecturer in Employee Relations at the Botswana Public Service College.
The theory he advances is that senior managers at these organisations get extensive non-wage benefits such as car, housing and entertainment allowances to circumvent the salary cap that the government places on parastatal pay.
“Such allowances would be approved by the board but rarely would boards oppose or limit them, possibly because board members are also paid through the same system of allowances,” says Tswaipe, adding that the Public Accounts Committee of the National Assembly recently found that some board members earn between P50 000 and P100 000 monthly as responsibility
and sitting allowances. “If we were to publish names of board members it would prove that such income indeed flows to a few rich households.”
Tswaipe chides the state enterprises for behaving like large private companies with the perks of managers and board members resembling profit-generating enterprises when most of them literally survive on public funds.
“Only a few occasionally pay dividends to the shareholder and even then it is usually paltry amounts, compared with the huge amounts pumped into their operations,” he says.
The government has announced bold plans to reduce its wage bill but the IMF wants it to do more. Over the next three years, the budget will target an annual 5 percent reduction in the wage bill but according to the IMF’s own calculations, “the savings generated from measures such as the outsourcing of low-skilled activities to the private sector, hiring and vacancy freeze and natural attrition will likely deliver at most one-fifth of the 5 percent targeted reduction in the wage bill.”
Thus the Fund wants the government to implement “bolder” measures that will include “streamlining the system of non-wage payments, rationalising the size and structure of government, tightening the link between pay and performance, strengthening payroll systems, and revising the wage scale.”
