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Government vs private sector salaries in South Africa

Government vs private sector salaries in South Africa

Workers in the South African public sector are more educated, older, more skilled, and more diverse when compared to the formal private sector – which translates into a better salary.

These are some of the findings in a new research paper published by the Development Policy Research Unity from the University of Cape Town, investigating the demographic, employment and wage trends of South Africa.

The university department said there are currently around 15 million people employed in South Africa – up from 12.4 million in 2004.

This increase of 2.6 million over the last decade is equivalent to an average annualized growth rate of 2.3%.

Despite a growth in jobs, overall unemployment in the country has worsened, with as many as 8.2 million people jobless.

Certain industries have seen a massive decline over the past decade – particularly the primary sector (agriculture and mining) which have seen close to 720,000 jobs lost between 2001 and 2012.

The tertiary sector picked up the slack, however, adding 2.72 million jobs over the same period – most of which were created in the community, social and personal services industry – predominantly made up of public sector employment.

Government has become one of South Africa’s biggest job creators: the total number of public sector employments has increased from 2.16 million in 2008 to 2.69 million at the end of 2014 — an increase of more than half a million jobs in a six year period.

This is further broken down into 2.37 million people who are employed by government directly, and 322,960 who are employed by state-owned enterprises.

Thus the main drivers of public service jobs has been within national, provincial and local government structures, rather than within SOEs, which have remained fairly stable in their overall employment.

Comparing the public sector demographics to the private sector yielded some interesting findings- most notable of which was that, on average, public sector workers get paid more than their private sector counterparts.

The real monthly wage of an average public sector employee is R11,668 compared to R7,822 for an average private sector worker.

“In addition, public sector wages have less dispersion than private sector wages, indicating a lower level of wage inequality within the public sector,” the group said.

This is because public sector workers are more unionized than private sector workers, which gives them more power to negotiate wages.

For non-unionized workers, the average real monthly wage in the private sector is statistically significantly larger than that of the public sector, by a margin of ZAR952 (USD99).

“This suggests that the public sector premium is negative, or at the least disappears, for workers that do not belong to a union,” the researchers said.

Wage distributions for public and private (non-public) formal sector employees, by union status (2013)

Wage distributions for public and private (non-public) formal sector employees, by union status (2013)

Other interesting demographic findings:

  • The average age of public sector workers is 41 years old, compared to 38 in the private sector.
  • Public sector workers have a significantly higher average educational level – with this average rising faster in the public sector than the private.
  • Females have greater representation in the public sector, making up 52% of the respective workforce, compared to 44% in the private sector.
  • From making up 72% and 66% of public and private sector employees in 2008 respectively, Africans now make up 77% of public sector employment, with little change in this proportion in the private sector.
  • White workers make up a smaller proportion of workers in both sectors now than they did in 2008.

Worrying situation

While segmenting the unionised vs non-unionised, public vs private workers in such a way is typically out of “general curiosity and (for) academic interest” – the researchers note that, for South Africa, this is a worrying picture.

For an economy that is unable to generate enough private sector jobs – or where firms are avoiding direct employment through labour brokers – basing a long-term employment strategy on jobs in the public sector would require “critical reassessment” for forward growth strategies.

This is of particular concern when you note that South Africa’s public wage bill is sitting close to R500 billion a year – over a third of the budget.

More on the public sector

Tough choices ahead as govt loses control of wage bill

R500 billion wage bill for ‘cadre deployment’

What nurses, teachers and police officers earn in South Africa


BusinessTech's Staff Writer is directly plugged into the South African Internet backbone, and spits out press releases and other news as they receive it. They are believed to be cl...
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  • RainbowMan

    The public sector don’t need to be productive and their wages don’t present a risk to the “companies” liquidity, …… whereas as the private sector need high productivity and meet tight budgets to stay in business.

    • 4M

      And make more profit, don’t forget

  • Skerminkel

    The public sector employs very few completely unskilled labour when you compare it to agriculture, mining and construction. It therefore makes sense that the average salaries are higher.

  • Aps

    Education levels are higher in public sector..? What level of public sector worker have they surveyed.?

    • Blapartheid Zulu

      LOL – thats because all their CV are fraudulent!

    • Mikhael Rowe

      I was as flabbergasted by that as you were.

  • bengine

    Let’s for argument’s sake say the study is correct?

    Then could someone explain to me how this better educated more mature workforce is managing to screw things up so badly and getting their butts kicked by the private sector.

    Bit of a sad indictment on something …

    • The BOSS

      I’ve got an answer for you…..Laziness!!!

      • bengine

        I don’t think that is it – laziness is a global condition – it is simply not tolerated in the private section.
        Bottom line is – you can have an organisation with the most talented / skilled people but they will 9/10 be beaten if the other team with less talented / skill has better leadership.

  • Gary Fields

    So what the article basically says is that Government has taken on the role of Chief Employer. It has also taken on the role of delivering post, generating electricity, flying people around, oil and gas exploration and development, healthcare, telecommunications and so on.

    Basically, government taking on the role of chief employer only shows:
    1. They wish to curry favor with the voters by providing them with overpaid jobs.
    2. The wish to remain in control of national assets to fund their own nefarious schemes either as a cash cows or to offer lucrative tenders to friends in exchange for kickbacks.,
    3. They have failed to create a vibrant economy where the private sector creates most of the jobs and the government does simply what it should do – administration and rule enforcement. This is a truer economic democracy – the people rule. With government playing the role of chief job provider it serves as an economic dictatorship – a ‘one-and-only’.

    By being the chief employer government acknowledges itself a failure

  • Blapartheid Zulu

    Of cos their education levels are stated as higher as the requirement to get in gov is:

    1. Must be black
    2. Must have a FAKE CV
    3. Money to bribe your position
    4. Know someone
    5. Repeat step2

  • Ryansr

    “White workers” – what are those? I know of “White walkers” in GOT.

    • Mikhael Rowe

      Albinos

    • Fanandala

      Your are either an entrepreneur or a worker. If you are not an entrepreneur – business man, and are employed by somebody you are a worker.

      • Ryansr

        Thanks

  • Erlo Muhl

    Because of quota system in workers employed for the State and favouritism. Private enterprise bosses must make ends meet, Government seems to just spend.

  • Mikhael Rowe

    This must explain why the private sector is so afraid of unions: “This is because public sector workers are more unionized than private sector workers, which gives them more power to negotiate wages.”

    • Fanandala

      It is not so much because of being unionised, it is because public sector workers are largely captive ANC voting fodder. You have to pay them better to make sure they vote for you. If they go on strike you do not have to spend your own moeney to satisfy their demand, but the taxpayers. And we all know the ANC attitude to them, fork the taxpayer. Our voters are either paid from taxes or are too uneducated to get taxed anyway.

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