Public sector wage bills are one of the largest drains on the national budget, accounting for nearly R550 billion – almost a third of the government’s total spend.
This is the equivalent of 14% of South Africa’s GDP, and given the terrible quality of South African public services, it appears to be money poorly spent.
Making matters worse is that public sector employees are often paid more than their private sector counterparts.
Additionally, despite the increased difficulties faced by state-owned enterprises (SOEs), government employees have enjoyed salary raises well above inflation for years.
The financial drain from public sector salaries and the poor services rendered has resulted in international ratings agency Moody’s recently stating that SOEs are the South African economy’s biggest threat.
No sign of relief for the taxpayer
One would therefore expect that the SOE-sized weight on the taxpayer’s pocket would be one of the government’s top priorities if they hope to improve the financial outlook of the country.
The 2018 National Budget paints a grim picture, however.
Medium-term estimates predict that the public sector wage bill will rise to R677 billion by the 2020/2021 fiscal year, thanks to wage hikes.
How SA compares to other countries
To put SA’s public sector wage spending into perspective, we compared it to other nations.
South Africa’s 14% of GDP spend doesn’t stack up well against BRICS (Brazil, Russia, India, and China) nations and other prominent countries, according to Our World in Data’s statistics.
The likes of Brazil (11%), Australia (10.44%), USA (9.74%), India (8.13%), and Russia (13.7%) all sit below South Africa when it comes to public sector spending relative to GDP.
The United Kingdom was the only country in our referenced list which spends more than South Africa relative to its GDP – 14.95%.
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It must also be noted that while South Africa’s public sector salary expenses haven’t seen any significant decrease in recent years, data shows that other leading developing nations like Brazil, Russia, and India have been cutting their public salary costs.
The graph below, from of Our World in Data, shows how South Africa compares with these and other nations over time.