That our public sector has more people than necessary on its books is no longer in dispute. For a country of two million people to have two hundred and sixteen thousand (216 000) people working for the government is a trend that should worry all of us. We are simply not in a good financial position to fund the humongous wage bill that comes with such numbers. And the fact that we can , in the interest of fiscal prudence , do without the intrinsically unproductive work that many government bureaucrats do , strengthens the case for reducing the wage bill. Apparently civil servants work on a rotational basis at the moment to decongest in the midst of the coronavirus pandemic but you would not notice or feel the impact.
Our public sector employment numbers do not compare favourably with even those countries considered to have high public sector employment such as Denmark Sweden and Norway. These countries employ less than 30 % of the total workforce. This means therefore that the majority of the people (70%) are employed in the private sector. On the other hand Japan’s and Greece’s public sectors employ 7 and 15 percent respectively. Mauritius has almost the same population as Botswana and employs approximately 100 000 people in the their civil service while the number of people employed in private businesses employing more than 10 people, stood at about 221 000 people.
Now let us contrast that with our situation. According to the 2018 Formal Employment Sector Survey carried out by Statistics Botswana, there were 417 162 formal jobs. 25.7 per cent of these people were employed by central government, 22.8 per cent by local government while parastatals employed 4.7 per cent of the total work force. Given that central government, local government and parastatals are all funded by you and me, the public sector effectively employs 53 percent of the workforce.
So it should not just be the IMF alone casting doubts on government’s wisdom of persisting with a rising wage bill. In February the institute noted that, “The government’s continued support to growth and employment through fiscal expansion (increases in public sector wages, employment and social spending, continued investments) lead to large fiscal deficits, a persistent drawdown in buffers, weakening the external position.” They further advised the government to “foster competitiveness and boost jobs,” by “reducing the government footprint in the economy” and adopting measures aimed at “containing the wage bill to protect efficient capital and social spending”. In English it means that the Fund encouraged the government to reduce its size and allow the private sector to lead economic growth and the creation of wealth and jobs.
So even if you do not work in government, you still have a skin in the game because an outsized government is in no one’s interest. It crowds out the private sector skills needed to maintain competitiveness.
When government is too big it struggles to meet its financial obligations and ends up running fiscal deficits. To fund these deficits it is forced to either raise taxes or borrow (or both). Rarely do such governments commit to reducing public spending because that denies them the power to buy votes through vanity projects and handouts.
Even though we encourage government to borrow locally because of the positive effect on capital markets that too has its own downsides because resources that could be channeled towards productive activity are then eaten up in buying government bonds.
Taxes means less disposable income for people to consume, save, invest and pay for their children’s education. So we should rein in tax and unnecessary spending and, privatize some assets and pay only for the government that we need, not a bloated one.
