High wage bill derails Govt. plans

Wages, salaries, allowances, overtime and pension contributions, stand at 15 percent of GDP Gov’t freezes vacancies for 2022/ 23 Financial Year to finance other pressing matters

Government has decided to freeze additional funding for vacant positions in the coming 2022/ 23 Financial Year as the public service wage bill continues to bulge.

The Directorate of Public Service Management ( DPSM) has revealed through a Savingram to all Accounting Officers that a major challenge facing Government is the unsustainable level of the wage bill, which currently stands at 15 percent of Gross Domestic Product ( GDP) against the acceptable level estimated at less than 10 percent.

The DPSM said as the budgetary process for the financial year 2022/ 2023 has commenced, there is need to modify processes and operations for the purpose of aligning them to the new reality in terms of resource utilisation.

“The wage bill as a percentage of the Total Ministerial Recurrent Budget on the one hand stood at 46.2 percent in 2018/ 19, 48.3 percent in 2019/ 20, 52.2 percent in 2020/ 21 and 53.7 percent in 2021/ 22.

“This high wage bill is worrisome not only from the fiscal perspective but also from the growth perspective, as an upward movement in Public Sector wages tends to, among others impede the private sector’s ability to compete effectively.

“As addressees may be aware, the COVID- 19 pandemic has exacerbated this by causing unprecedented levels of economic disruption resulting in increased expenditure against the already declining revenues”, Acting DPSM Director, Samuel Rathedi said in a 2nd June 2021 Savingram.

Rathedi explained that in response to these mentioned challenges, the Government of Botswana has adopted fiscal consolidation measures aimed at, among others, efficient allocation of resources, reducing and ultimately eliminating wastage and entrenching cost containment.

Rathedi stated that furthermore, Ministries, Departments and Agencies ( MDAs) should be mindful that the DPSM is still implementing Presidential Directive CAB 06EXO/ 2020, which directed that an equivalent of 50 percent of vacant positions in value terms be abolished, as part of the measures to reduce the Public Sector wage bill.

“In view of the above, addressees are informed that additional funding for new positions will NOT be accommodated during the 2022/ 2023 financial year budget estimates.

“MDAs are instead advised to continue rationalising vacant positions to fund critical manpower requirements,” Rathedi advised.

DPSM Director Goitseone Mosalakatane had early in a Savingram dated March 4th 2021 told the Accounting Officers that the policy discussions during the 2018 IMF Article IV consultation with the Botswana Government had highlighted the need for Public Sector Reforms, including a gradual reduction in the size of the sector over time, which would allow the state to focus on providing high- quality services more efficiently.

She explained that it has further revealed that the Government’s overall expenditure envelope, as a share of GDP, is very high by international standards, thus warranting a thorough assessment of pockets of unproductive spending and ways to increase efficiencies.

“As you might be aware, the Ministry of Finance and Economic Development ( MFED) has revealed during the 2021/ 2022 budget preparation that a major challenge facing the Government of Botswana is the unsustainable level of the personal emoluments. “This entails the wages, salaries, allowances, overtime and pension contributions, which currently stand at 15 percent of GDP against the acceptable level estimated at less than 10 percent of GDP. Vacancies be withdrawn from Ministries, Departments and Agencies’ ( MDAs) recurrent budgets to cater for supplementary estimates”. Mosalakatane pointed out that in light of the foregoing, all existing vacant positions have been frozen for the remaining period of the 2020/ 2021 financial year, save for those under the Ministry of Basic Education and Ministry of Health and Wellness.

“Since funds for the vacancies will only be reinstated in the next financial year 2021/ 22, Ministries, Departments and Agencies are advised to discontinue recruitment into such vacancies until 1st April 2022.

“Those who are already at an advanced stage of the recruitment process are advised to withhold appointments until further notice,” the DPSM boss has said at the time.