SA government’s R137 billion wage bill vs emerging economies

South Africa’s public debt has risen rapidly to just under 50% of the country’s GDP in recent years – with more than 14% of this coming from government salaries alone.

This is according to the OECD’s Economic Survey of South Africa 2017 which found that government’s spending structure is skewed by a large wage bill (35% of total GDP in 2016) compared to traditional OECD and emerging market economy averages, where the figure is an average of 14% of the total.

The report notes that, together with debt-servicing (10%), the high total is limiting the capacity of the South African government to meet the physical and social infrastructure investment needs necessary to unlock higher growth.

SA government spending vs other emerging markets

(click on images to enlarge)

Breakdown of spending

Department which pays the highest

According to a recent report by Stats SA, South Africa’s 47 national government departments spent R137 billion on compensation of employees during the 2015/16 fiscal year.

More than 70% of the R137 billion was taken up by just three departments: South African Police Service (42%), Defence (18%) and Correctional Services (10%). All three share one common element – their main function revolves around security.

However, Stats SA also looked at the data based on how much each department pays, on average, per civil servant.

Ranked on this metric, the top spot is occupied by the Office of the Chief Justice, which spent R1.3 billion in compensation during 2015/16.

With 1,613 employees under its wing, that translates to an annual compensation of R808,249 per person.

Big Business

Government’s workforce has become a major part of the economy – arguably more important than even the private sector when looking at the country’s employment trajectory, according to senior researchers at the University of Cape Town.

Public sector employment’s share of total jobs has risen to 17.5% by the end of 2014, up from 14.5% at the beginning of 2008.

The largest contributors to public sector job growth are occupations that fall under the category of unskilled workers, including sweepers; farmhands and labourers; helpers and cleaners; construction and maintenance labourers; and garbage collectors.

The other major contributors are medium-skilled workers, like police and traffic officers; institution and home-based care workers; other protective services; prison guards; technikon teacher training; cooks and childcare workers.

The public sector is also much better at addressing representation issues in the workplace, according to the researchers, with a higher proportion of both women and black African workers in the sector – groups that were discriminated against under apartheid.

They are also almost singlehandedly responsible for the country’s union power and wage structure with union members making up almost 70% (1.4 million workers) of all public sector formal workers in 2014 – up from 55% in 1997 (834,000 workers).

Read: SA could implement 4 hour work days as a minimum wage compromise: report

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SA government’s R137 billion wage bill vs emerging economies