The recent demand by civil service unions that government should pay salaries on a 22 and 26 day month and additional allowances for nurses and teachers is expected to put more pressure on Botswana to reduce the size of its civil service.
A report by the International Monitory Fund (IMF) evaluating government employment and compensation among a number of countries, which was published this week, recommended, “An overall or selective nominal freeze of wage levels for a limited period of time. Assuming unchanged employment levels, this should result in a reduction in the compensation of employees, relative to GDP, as the economy expands in nominal terms”.
The report published on Tuesday, however, warned that, “In Botswana, in spite of the freeze, the wage bill has increased since 2008/09, reflecting the normal “wage creep” that occurs as civil servants move to higher pay scales after meeting time-in-grade requirements. While politically difficult, some countries have also resorted to nominal wage cuts when fiscal sustainability was in jeopardy”.
The report came a few days after another IMF report, which called on the Government of Botswana to slash the size of its Public Service, saying the expense undermined the competitiveness of the economy as a whole. The IMF described Botswana’s Public Service as “among the largest in Africa”, saying it was weighing down the economy and stunting the development of the private sector.
The report noted that the Public Sector outbid the private sector for available labour; exerting upward pressure on economy-wide labour costs and contributed to high unit labour costs and unemployment.
While Government workers constituted 40 percent of the total formal workforce, they claimed more than 54 percent of total wages paid.
Statistics provided by the Breton Woods institution indicated that Botswana had a higher wage bill than Lebanon, Malaysia, Mauritius, Chile, Gabon and Costa Rica. Presently, Botswana has approximately 125,000 Local and Central Government workers.
In a bid to avert a nationwide civil service industrial action, the Government of Botswana last week agreed to pay civil service salaries on a 22 and 26 day month effective from May 2010 and to raise close to P2 billion as payment for arrears for the six months to October when the money will be paid out. The new structure will increase the already huge government wage bill by an estimated P4 billion.
This will increase the Botswana 2010/2011 recurrent budget by 15 percent. The figure is expected to go even higher, following this week’s agreement to address teachers’ and nurses demand for allowances for overtime and performing duties outside those they are required to do under the Nursing and Midwifery Act. The education and health sectors employ a large share of the government workforce. As such the compensation of civil servants is expected to sky-rocket even in the absence of wage and employment increases. This ‘wage drift’ effect is expected to be higher than the country’s GDP growth rate.