Government workers are out-earning the private sector in South Africa

 ·16 Nov 2023

Government employees are better paid than their private sector counterparts, with the median public sector salary being R46,000 per month while the private sector’s is R26,000.

This was revealed by labour analyst Andrew Levy, who told Newzroom Afrika that better remuneration for public sector employees has not resulted in better productivity. Levy argued that the increases received by the public sector, without a corresponding increase in productivity, are unsustainable over the long term.

“I do not think there would be a debate if they were more efficient and the government was able to increase its efficiency in step with the salary increases,” he said.

Levy’s data shows that the median salary for government employees is R46,000 per month, while the median salary in the private sector is only R26,000 per month. This means that 50% of government employees earn more than R46,000 per month.

Put differently, roughly half of all government employees earn 77% more than their private sector counterparts in South Africa.

Additionally, it’s important to note that this data does not include the considerable benefits that public sector workers receive, which are typically superior to those of their private sector counterparts.

However, CEOs of large, listed companies earn substantially more than government officials, including ministers, director-generals, and even the President.

Levy acknowledged that while it is true that CEOs earn high salaries, a large portion of their compensation is categorised as risk remuneration. This means that the bonuses and incentives they receive are largely based on their performance. If they do not perform up to the mark, they do not receive this remuneration.

“My view is that CEOs deserve their bonuses. They worked for them and probably resulted in the company thriving, employing more people and keeping others employed,” Levy said.

On the other hand, in the public sector, employee remuneration is not based on performance and is solely determined by the increase negotiated by trade unions.

“This has made the public sector labour force highly inflexible and inefficient,” said Levy.

Bloated public wage bill

According to the National Treasury’s own data, the number of government employees earning over R1 million per year has increased by 450% from just above 10,000 in 2013/2014 to over 55,000 in 2023/2024.

According to the document, The government employee wage bill has skyrocketed from R408 billion in 2013/2014 to R724 billion in 2023/2024.

The National Treasury said that this massive increase is due to government determinations and collective bargaining agreements, which are reviewed periodically to ensure fairness and competitiveness and to align with economic conditions and government priorities.

It added that pay progression agreements, pension contributions benefits and allowances – such as overtime pay, housing allowance, and medical aid – have to increase with the relevant inflation rate, and this, in turn, increases the total wage bill every year.

According to Treasury, another 180,000 employees earn between R600,000 and R1,000,000 per annum – equating to between R50,000 and R84,000 per month – while almost half of all 1.3 million government employees earn over R350,000 per year.

On top of this, the majority of South Africa’s public sector unions agreed to a 7.5% wage increase earlier this year after five months of strike action.

The two-year, multi-term deal is significantly higher than what the government had factored into its 2023 budget. The deal will come at an additional cost to the Treasury of R23.6 billion, Godongwana said, and government departments will have to find the remaining R10.1 billion through reprioritisation of budgeted funds.

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