Thursday, March 4, 2021

Gov’t projects a 1.6% rise in the public service wage bill

The public service wage bill will reach over 14.4 billion, reflecting an upward movement of 1.6 percent during the 2014/14 financial year, according to projections made by the Directorate of Public Service Management (DPSM).

Figures provided by the DPSM this week shows that the public service wage bill has been on the rise since 2008/09 when it stood at P9 billion but later rose to P11 billion following a 15 percent adjustment on public servants salaries. In 2013/14 government awarded a 15 percent salary increase, a move that saw the wage bill going down from P14.3 to P14.2 billion according to figures from DPSM.

Despite a decision by the government to freeze employment, public service wage bill has been steadily creeping up since 2010. In a recent paper, economists Dr Keith Jefferies, Bogolo Kenewendo and Thabelo Nemaorani of Econsult, a private economic and development consultancy firm, noted that though government employment has been growing very slowly, most of the increase in spending was due to higher average earnings, despite the supposed wage freeze.

A review of the government spending on its employees shows that average personal emoluments paid to public sector employees rose from P6, 094 per month in 2009/10 to P9, 253 per month in 2012/13, reflecting an increase of 52 percent. Jefferies and his team point out that the contributory factors include the various small adjustments that were made to public service salary scales; the substantial pay increase that most government employees received as a result of the new Public Service Act prior to the 2011 strike; and annual increments due to “notching”, as individual employees move up their salary scale.

“Other possible causes include salary increases as staff is moved from permanent and pensionable to contract terms of employment, more overtime, or more generous salary-related allowances,” read the Econsult economic review paper.

Concerns about the level of spending on the government wage bill were driven by an ever-increasing share of government spending and GDP devoted to salaries.

“This is unsustainable. Once government’s pension contributions are taken into account, nearly 15 percent of GDP was devoted to public sector salary costs in 2012/13, compared to a norm for a middle income country of less than 10 percent of GDP. Mauritius, for example is at 6percent. Also, the share of overall government spending devoted to salaries and allowances has continued to increase,” read the review.

The Econsult economists, who are well known as experts on the domestic economy, earlier this year revealed that though there was a general perception of cutbacks in government spending in 2013, this was not the case as government spending actually increased. Their findings are supported by the government Budget Strategy Paper for 2014/15 which was published in October last year.

The paper showed that government spending in 2013 went up by 10 percent over the previous year while development spending increased by 48 percent. Sunday Standard understand that the increase in overall spending was driven largely by personal emoluments as it accounts for the largest share of recurrent expenses of over 30 per cent. A four percent salary increase was made earlier this year.

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