‘We will’t maintain this kind of public sector wage invoice’


RYK VAN NIEKERK: Busines Unity South Africa, or Busa, launched a complete report relating to the general public wage invoice as we speak [November 9, 2020]. The general public wage invoice is at the moment very contentious, as it’s believed to be bloated and one of many the explanation why South Africa is teetering on a fiscal cliff. Tito Mboweni, the Minister of Finance, has additionally proposed a wage freeze for all civil servants for 3 years to chop authorities spending.

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Cas Coovadia, the chief government of Busa, is on the road. Cas, thanks a lot for becoming a member of me. Why did you fee this report?

CAS COOVADIA: Effectively, we commissioned the report as a result of that is clearly a vital problem, and infrequently debates are held with none goal information and goal reviews on the desk. We thus commissioned Intellidex to do an impartial report based mostly on Nationwide Treasury information, in addition to information from the labour power survey by Statistics South Africa. We’ve put this within the public house as a doc that may inform debate and dialogue on this problem, and permit the debates and dialogue to be based mostly on impartial information.

RYK VAN NIEKERK: I’ve learn by means of the report, and it’s really very unequivocal. It says the civil service is being paid an excessive amount of. South Africa can’t afford it.

CAS COOVADIA: Sure. Look, there’s a comparability of about 43 international locations by the IMF. The info exhibits that our civil service is paid an excessive amount of in comparison with these international locations. Having mentioned that, we consider that we have to get collectively as stakeholders, first to try to agree that, on the bottom of the information, that’s the state of affairs.

After which, if we agree on that, to try to agree on how we really treatment that over a time frame. These are troublesome points. They’re troublesome choices to make. However the actuality is that we don’t have any cash. We will’t maintain this kind of public sector wage invoice. If we don’t take the arduous choices, if we don’t really scale back that wage invoice over a time frame, we go into additional debt after which it turns into a monetary disaster – and we all know, now we have had examples of what occurred this 12 months in monetary crises.

The underside line is we simply don’t have the cash to maintain this, even when we needed to. However the actuality is that now we have to make sure that now we have a public service that’s skilled, that’s productive, and that’s appropriately paid on the idea of what they should ship and the productiveness that they really have. In order that’s the dialogue that we have to have.

RYK VAN NIEKERK: Is the explanation for this inflated wage invoice that there are too many civil servants, or that they’re being paid an excessive amount of?

CAS COOVADIA: The report signifies that the scale of the civil service – there no actual accepted template on what the scale must be. And we settle for that, given South Africa’s challenges, the social service supply that’s wanted, the inequalities, the geographic unfold of the providers that have to be delivered, we most likely have a civil service that’s not too bloated.

However the problem right here is that they’re very nicely paid in comparison with different international locations. The difficulty is that we don’t have the cash to take care of that kind of drain on the fiscus. And, if we don’t really take the arduous choices to cut back public sector wage expenditure, we’ll go right into a severe debt lure, which is able to then grow to be the monetary disaster, and we’re on a hiding to nothing as a rustic.

RYK VAN NIEKERK: Does this apply for academics, nurses, firemen, in addition to to the extra political positions throughout the civil service?

CAS COOVADIA: The report hasn’t gone into totally different classes of civil service employment. If we do have interaction between authorities, enterprise and labour, I’d suppose that a part of the engagement is to begin barrelling down and seeing which components of the civil service are costing essentially the most, Are they, for that price, being productive sufficient? Ought to we be really concentrating extra on totally different components of the civil service? These are the kinds of discussions we have to have. The report hasn’t gone into that.

It has not gone into totally different sectors of the civil service. What it does advocate is that some kind of compact must be fashioned between companies and authorities, the place we begin really speaking about this factor, barrelling down into this factor and seeing what we do about it.

RYK VAN NIEKERK: You’ve mentioned that the wages our civil service obtain are lots greater than what we’ve seen in different international locations. How do they examine to the South African personal sector remuneration?

CAS COOVADIA: The report didn’t go into that. Simply off of the highest of my head, totally different components of the personal sector have totally different remuneration buildings. However the distinction right here is that there are buildings and processes within the personal sector, as a result of the personal sector has to account its shareholders. There are buildings and processes in place that guarantee that there’s productiveness, and productiveness for remuneration is tracked, and there’s a correlation between productiveness and remuneration. So I believe that’s the distinction.

What’s occurred within the public sector is that there appears to be no actual mechanism to find out whether or not there’s a correlation between wages and salaries paid and productiveness. There appears to be no mechanism to make sure that taxpayers’ cash is correctly accounted for. However the report targeting public sector wages, and didn’t have a look at personal sector wages.

RYK VAN NIEKERK: The report doesn’t make suggestions, however what do you suppose is the message from this report back to authorities? Minimize the scale of the workforce or lower salaries, or each?

CAS COOVADIA: Effectively, it could possibly be each. And once more, the report says that authorities, enterprise and labour have to get collectively to see how finest to deal with this. As we’ve mentioned, the scale of the civil service we’re not that involved about. However I believe all three stakeholders have to fulfill themselves that the scale is what is required, is optimum. If the scale is perfect and we are able to all agree that we are able to’t scale back the scale, then we’ve received to speak about decreasing the wage invoice. These are discussions that we have to have.

What this report says is that actually, from Nationwide Treasury information and Stats South Africa information, compared to 43 different international locations our public servants are extremely paid.

RYK VAN NIEKERK: Tito Mboweni, the Minister of Finance has already proposed a freeze of salaries for 3 years. It has not been nicely acquired by commerce unions. Do you suppose Mr Mboweni and the President have the political capital to really implement such a freeze, or much more aggressive cuts?

CAS COOVADIA: Effectively, I can’t reply that query. However what I can say is that we don’t should handle …… We’re not in a state of affairs the place now we have that luxurious of selection. We’re in a state of affairs the place even, if we transfer based on the medium-term price range’s framework, we’re going to have to lift extra debt. We’re going to get additional into debt. After we go into the market to lift the debt, we’re stepping into as a sub-investment grade rated nation, which implies we’re not going to have the ability to compete with different international locations for the fee at which we’re going to have the ability to increase funds. And it’s simply not sustainable. That’s the underside line.

Now, we are able to have all types of debates about that and all types of ideologies about that. The figures don’t lie, and the figures say clearly that we’re in a severe disaster. And if we don’t deal with these points we shall be knocking on the doorways of the IMF or going taking a look at such choices.

RYK VAN NIEKERK:  Cas Coovadia is the chief government of Busa.