Heed World Bank’s warnings on pay for senior bureaucrats
The government has put various measures in place to improve the capacity and effective functioning of the public service. Two of these key measures are the professionalisation of the service and efforts to create a layer protecting top government employees from political meddling. But none of these measures will amount to anything unless government addresses the pay of senior public servants.
Senior managers in the service have borne the brunt of government efforts to trim the public sector wage bill. Senior managers are easier political targets — they won’t toyi-toyi, strew rubbish on the streets or threaten patients’ lives. And there isn’t much public sympathy for senior public servants nowadays due to the dominant narrative that sees them as purring fat cats who earn a lot but deliver very little value for the public.
Senior managers’ pay has been cut while wages in the lower levels — trade union members — rose sharply, leading to wage compression. This refers to a narrowing of the gap between the pay of employees at the top and those in the middle and bottom. Such a narrowing might be seen as a positive public policy development in a country with the world’s highest income inequality. However, much economic literature points to the dangers of the approach taken by the government in cutting the public sector wage bill.
The World Bank and the IMF have previously warned
— not SA specifically but in general — that it’s not by how much the wage bill is cut but how it is done. The IMF has said in previous documents that a public sector that “is starved of human capital” would have restricted capacity to produce public goods that may be key for economic development.
The World Bank has previously cautioned that the aim of public service reform shouldn’t only be to contain the wage bill; it should also be the creation of “a government workforce of the size and with the skills, incentives, ethos and accountability”a country needs to drive its economic growth and development. SA falls far short on both, with economic growth lagging well behind the rate of increase in population, and development stagnating.
The government’s 1996 macroeconomic strategy, the Growth, Employment & Redistribution (Gear) policy, sounded a similar warning: “Fiscal discipline is synonymous with the proper management of wages and salaries in the public service, since remuneration comprises almost 50% of the noninterest budget. However, containment of the wage bill without maintaining adequate conditions of service for civil servants reduces the overall efficiency of government and is in the end counterproductive.”
Michael Sachs and two fellow researchers at the Southern Centre for Inequality Studies noted in 2022 that consistently forcing down real incomes of senior managers and judges (both categories fall outside the public sector collective bargaining process) may have contributed to “the brain drain from the public service and the operational collapse experienced in so many government departments over the last decade.
“The emphasis of government’s programme is to reduce average pay, and it is sometimes believed that
MANAGERS HAVE BORNE THE BRUNT OF GOVERNMENT EFFORTS TO TRIM THE PUBLIC SECTOR WAGE BILL
government employees are overpaid and unproductive, and therefore reductions in their numbers and pay can be achieved without negative [effects] on public services,” Sachs and his colleagues said, concluding that their findings challenged the assumptions.
There is a common belief that public servants stay in government for a long time due to job security. But a 2018 paper published by the Institute of Labour Economics, using the French public service as a case study, said job security was not an attraction for top public servants. That would explain the brain drain referred to by Sachs and his colleagues.
It is common knowledge that public service dilapidation, threatening the judiciary’s functioning, is a big contributor to economic decline. Clearly, that’ sa message that has yet to find a receptive audience among politicians.
Caught between the pay squeeze by politicians and the public that sees them as fat cats, the best of senior managers have to leave the public service and join the private sector. Yet the departure of the better ones means rebuilding government capacity to run the country properly will be harder.