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Warning over critical brain-drain in South Africa

Source: My Broadband, 06/11/2024

The reinstatement of the plan to offer early retirement to senior civil servants as part of a broader strategy to reduce the nations high public sector wage bill has been met with mixed reactions with critics arguing that it will result in a brain drain in the countrys civil service.The medium-term budget policy statement (MTBPS) tabled by finance minister Enoch Godongwana on 30 October noted that the government was proposing to reactivate early retirement without penalties in 2025/26 and 2026/27 in a bid to further contain public service wage costs amid a deteriorating fiscus.To support this initiative, an additional R11 billion will be allocated over the next two fiscal years. Details will be set out in the 2025 Budget, stated the budget documents.The MTBPS highlighted that the public sector wage bill represents the governments most substantial financial challenge. Additionally, Treasury noted that the unresolved nature of the 2025/26 wage agreement, particularly its impact on employee compensation benchmarks, presents a major risk to the countrys medium-term fiscal outlook.A Centre for Risk Analysis report highlights that the countrys public sector wage bill costs South Africa around R721 billion a year (2023/24 figures) over 30% of the countrys budget.Although South Africa has a much smaller economy, its wage bill as a share of GDP (about 10.5%) towers over economic powerhouses such as the United States, United Kingdom, Australia and Japan, it said.Godongwana stated that the government was rolling out these incentive initiatives to reduce the size of the workforce and attract younger talent to the public service.This is part of building a capable, ethical, and developmental government, said Godongwana.Not so fastWhile some have lauded this move, some trade unions, civil society organisations and economists have raised a red flag that this may not achieve the desired outcome, but rather result in an exodus of necessary skilled civil servants.South Africas largest trade union federation, the Congress of South African Trade Unions (Cosatu), said that the government should attract and retain skills in the public service rather than showing people the door and lamented the cutting down of the public service wage bill.The MTBPS has confirmed that the public service wage bill has shrunk and not grown as a portion of the Budget from 35.7% to a projected 31.4% [and] frontline services from hospitals to schools, Home Affairs and the SAPS, are paying the price for the dangerous reductions in filling essential posts, said Cosatu in a statement.We are witnessing the loss of critical skills. SARS has shown that by appointing competent management, removing corrupt elements, filling key vacancies and investing in the capacity of the state; society reaps the rewards of quality public services that spur economic growth. This is the model that needs to be followed, not suffocating the nurse or teacher, added the trade union.Civil society organisation Section27 said that concerns linger that this move wont sufficiently address understaffing in education and healthcareÂ¦ in fact, this proposal juxtaposes with provinces efforts to redress staff shortages and backlogs caused by austerity budgeting.The organisation cited Gauteng Healths recent decision to rehire retired staff to tackle hospital backlogs, highlighting a broader issue in both health and education sectors.It said early retirement proposals limit skills transfer, leaving inexperienced staff to fill critical roles.The government must recognise public sector wage spending as an investment in delivering on its constitutional obligations, rather than a burden, said Section27.Speaking to BusinessTech, Chief Economist of the Efficient Group Dawie Roodt said that while he believes that it is important to trim the public sector wage bill, this move would result in the exodus of very skilled individuals, greatly hampering service delivery.The people that will leave are experienced people, which will have a huge impact on service delivery, said Roodt.With an influx of young, inexperienced workers, I think it is going to deteriorate the kind of services we get from civil service [which is already subpar], he added.Roodt explained that it will be some slight saving on the wage bill, but really not much.He said that the main issue of the civil service wage bill is that most are hopelessly overpaid.For example, the number of government employees earning over R1 million per year has increased by 280% from a decade ago, with almost 38,000 public workers earning six figures in 2024 and even more when adding all the perks and benefits.While there are many who are productive and hardworking, Roodt said, a huge portion are not giving the state value for money for the services they pay for.He said that reigning in on overpaid salary bands would achieve a much-needed penny-pinching without losing critical skills that would hamper service delivery.

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