Times Of Swaziland: IS BALLOONING GOVT WAGE  BILL WORTH THE NOISE?

IS BALLOONING GOVT WAGE  BILL WORTH THE NOISE?
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By Thabiso Dlamini on 14/02/2018 00:36:00


The civil service salary review was announced in July 2016, with proposed pay
rises ranging from 17 per cent to 38 per cent backdated to April 2016. In real
numbers, the wage bill is expected to cost government E850 million or two per
cent of GDP against the initial budgeted E500 million.
This is notwithstanding the fact that government is facing a serious fiscal
crunch due to the decline in Southern African Customs Union (SACU) revenues, and
now adding to the pressure, a wage bill in the 2016/17 financial year that has
increased to an estimated 47 per cent of recurrent expenditure.
What happens every month-end when government has to fork out all of this money
to pay civil servants? If the pressure does not fall onto the Swaziland Revenue
Authority to tax every component of economic activity in the country, the
alternative is to increase domestic borrowing just to ensure that employees get
paid.
The wage bill is a topical issue of government expenditure because of two simple
reasons. The first is that government cannot afford it anymore because the
public revenue base has been eroding, which means government has less money than
it used to have before. Secondly, is that the wages are crowding out other types
of government expenditure that could be dedicated to quality service delivery,
especially in areas of health, education and infrastructure.
If government could adjust the wage bill into a more affordable and sustainable
level, then more money would be free to tar our gravel roads, pay elderly
grants, and provide medicines in hospitals, among many other critical service
delivery needs. So what is most likely happening is that government operates
month to month on a frenzy of collecting the little bit of money that is
available to meet the huge salary obligations at the expense of other critical
services.
To address the issue of the ballooning wage bill, government has two options:
one is to adjust the wage bill so that it decreases permanently over time as a
percentage of GDP and as a share of government expenditure. The other option is
to be deliberate and cut down the wage bill by leaning out a lot of government
positions to achieve fiscal sustainability.
In fact, leaning out government positions is probably the most important aspect
of building a more sustainable civil service wage bill. Government has to be
more effective and efficient in implementing the different development goals
within a set and sustainable government structure.
The reality is that the real increase in the cost of the civil service is due to
expansion of government positions, the employee head counts, with most increases
occurring within the Ministry of Education, Police, and Defence.
The point is not to put people out of jobs, especially given the fact that most
of the civil servants like many employees in the urban areas of Swaziland
provide financial support to rural communities who would otherwise have nothing
to sustain their daily needs.
Part of the civil service wage bill also contributes to the aggregate demand for
goods and services in the economy, and so prevents the economy from shrinking or
total collapse. So it is clear that we need people working for government, and
these government employees are also an integral part of the economy, because
they too spend their salaries in the economy and thus keep the economy going.
However, the civil service wage bill cannot keep growing forever. More
government money needs to be focused on delivering key services that will
benefit the nation as a whole.
Fortunately, government does have a debt policy in place that determines how
much acceptable domestic debt the country can sustain at any one given point in
time. Therefore, in Swaziland domestic debt is capped at 25 per cent of GDP, and
government does not impose limits on external debt.
Though the sky is supposedly the limit on how much external debt we can have as
country, we should not be borrowing from other nations to pay our own civil
servants. It makes sense to get loans on some of our capital projects, but it
would be irresponsible to borrow money just to pay people to occupy offices.
Let’s make our money pay for the things that matter, and not to fill pockets
that will suck us dry.