Economist Mike Schussler has shared two graphs which show how government spending, particularly on wages and salaries, are pushing South Africa into a deeper economic crisis.<\/p>\n
According to Schussler’s data, government spending on wages, expressed as a percentage of the country’s total wage bill, has jumped significantly over the last decade (sitting around 30%), as the country’s budget deficit has also widened.<\/p>\n
In effect, the higher government wage bill is forcing the country to have to borrow more money – with Schussler questioning whether the country is actually getting anything for the amount it is spending.<\/p>\n
Notably, the economist pointed out the while government wages account for 30% of the country’s overall wages, the state only employs around 12% of all workers.<\/p>\n
“The government employs about 1.8 million people directly – but 10.2 million people remain unemployed. Does the high wage bill make sense in this context?” he said.<\/p>\n
Adding state-owned companies into the mix, the number of people employed by the state jumps to 13%, but the wage bill then climbs to 33% of GDP.<\/p>\n
“This means that the average government-related employed person is very well off – while the whole country has to bail out state companies, pay more in interest and taxes, etc,” Schussler said.<\/p>\n
\nRelationship: Government wage bill as % of all SA wages vs. budget deficit. The relationship shows the higher the total wage bill equals higher gov deficit (SA borrows more). Does a higher wage bill lead better services or does it lead to higher government debt and downgrade? pic.twitter.com\/ctORQnljr2<\/a><\/p>\n
\u2014 mike schussler (@mikeschussler) September 1, 2019<\/a><\/p><\/blockquote>\n