This graph published in Treasury’s 2021 Budget Review released yesterday, speaks louder than 1,000 words. South Africa’s public servants cost taxpayers proportionately double those in Ireland, Korea and Switzerland – 50% more than the UK and USA. Indeed, in cost they rank alongside the Nordics. Ouch.
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This excessive burden is a direct consequence of the Zuma Administration’s economic idiocy which raised public sector salaries an average of 4% above inflation annually over the past decade. This compares with a private sector which had to cope with anaemic 1.5% annual GDP growth over the same period.
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Put another way, the ANC looked after deployed cadres by borrowing from future generations. SA’s debt-to-GDP ratio was already heading for new peaks ahead of Covid-19. Now it is beyond previous records and heading for 90% (from 26% a decade ago), assuming an ambitious R265bn wage cut can be implemented.
As I wrote yesterday in my commentary on the 2021 Budget, Tito and Cyril are facing their Maggie Thatcher Moment. They will need to draw on their inner Iron Lady to tame SA’s public sector wage monster. Or condemn the nation to praying a miracle will rescue it from an inexorable decline to Zimbabwe Lite.
And for your listening pleasure…
Today’s fresh audio on BizNews Radio…(click on the link to access)
- Azar Jammine answers burning question: Is SA in economic crisis?
- Magnus Heystek: Commodity prices saved taxpayers from hikes
- Dawn Ridler: Here’s how Budget 2021 plays out on your persfin
- FB: Finmin Tito Mboweni admits “SA is dangerously overstretched”
- Global portfolio update: JSE stocks, 2U buck weaker Wall Street
