Monday, June 21, 2021

Civil servants will never have it as good as they did in 1975

Three months after it started mining diamonds, Botswana chose to celebrate the new found wealth in what appears to have been a fiscally-misguided manner ÔÇô its wage bill exceeded what it had in the state coffers. That mistake has not been repeated since.

The year was 1975 and the country was saying goodbye to abject poverty, having been the third poorest in the world when it gained independence in 1966. The average per adult national income in that year was Ôé¼5018 (P61 195) which comes to P5099 a month. The only problem was that, in that year, the per adult GDP was Ôé¼4455 (P54 329) and the government was being overgenerous. Interestingly, going as far back as 1950 Bechuanaland Protectorate, there was virtually no gap between the average per adult national income and the per adult GDP. The divergence began in 1971 and the realignment resulted in the per adult income overshooting per adult GDP.

As a World Top Incomes Database graph shows, only once did the national income and GDP lines converge and overlap in that manner. While the income line has stayed below the GDP line since, the lines almost converged in 1981 when theaverage per adult national income was Ôé¼6466 (P79 097) to a per adult GDP of Ôé¼6644 (P81 024). This was the last time that the two lines touched each other. Oddly, from then on and even as the per adult GDP rose, incomes remained stagnant. Only in 1988 did incomes go up substantially. However, from then to date, the two lines have diverged dramatically as workers ÔÇô mostly civil servants ÔÇô went for years without substantial pay raise. Last year, the average per adult national income was Ôé¼18 128 (P221 249)) to a per adult GDP of Ôé¼20 934 (P255 496).

Since 2011, the World Top Incomes Database project at the Paris School of Economics in France has been conducting a study on the historical evolution of the world distribution of income and wealth, both within and between countries. The study will cover the Bechuanaland Protectorate years when present-day Botswana was a colonial territory ruled by the British. The researchers, who include Dr. Thomas Piketty, a famed economist and author of a New York Times bestseller on capital, have constructed top income share time series which they keep extending forwards and backwards for selected countries.Spanning over most of the 20th and early 21st century, the World Wealth and Income Database “aims to provide open and convenient access to the most extensive available database.” Its uniqueness is that it combines fiscal, survey and national accounts data in a systematic manner. Thus far, Botswana’s series goes back to 1950 and has yet to incorporate inequality data.

It will be interesting to get some more information on the Bechuanaland Protectorate series because of the racial and gender discrimination that was practised at the time. A pre-independence commission on enquiry into racial discrimination heard that a male white education officer without a university degree earned more than future cabinet minister in independent Botswana, Gaositwe Chiepe, who not only had a masters degree in education but was also senior education officer.

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