Some government employee salaries increased +1 000% in 10 years

The 2020 Medium Term Budget Policy Statement (MTBPS) has revealed that half of all long-term government employees’ salaries have increased in real terms.

Over the last 10 years, these government employees’ salaries increased more than 44%. Some 25% of employees saw salaries increase +71% with a small fraction having seen their salaries increase over +1 000%.

“The reason for these large increases are promotions of employees, especially those in lower salary bands,” according to National Treasury.

Salary increases

Some 830 000 public servants employed in 2020 have been working for government since 2010. Excluded in this total is 75% of the South African National Defence Force.

Table B.1 Average remuneration by rank, 2006/07 and 2019/20 (main budget, excluding SANDF)
Rands2006/07
average
nominal
 2006/07
real average
(2019/20 rands)
2019/20
average
 Real
average annual
increase
 Level 1-5    71,789151,405232,6733.4%
 Level 6-9     155,650328,269435,4302.2%
 Level 10-11     313,094660,322759,3841.1%
 Level 12-16     508,9741,073,4381,222,8981.0%
 Average     135,914286,646415,4602.9%
Source: National Treasury

Of these employees, 5% saw real decreases in average remuneration of at least 1% over 10 years. Another 5% saw salaries increase by between 0% – 19%.

National Treasury says all officials who were in level 1 in 2010, were promoted at least once. 24% were promoted more than twice. Of the 530 000 officials who were in levels 1 to 7 in 2010, 67% were promoted once, with 13% promoted more than twice.

Drivers of public sector salary increases

National Treasury points to three factors as drivers of government employee salary increases in the public sector as follows:

  • Introduction of occupation-specific wage dispensations in the late-2000s. This resulted in large, once-off increase to the salaries of skilled staff.
  • Annual cost-of-living adjustments to basic pay – resulting in compensation rising faster than the rate of inflation. In some cases, the exception was where adjustments for senior officials were in line with inflation.
  • A system of wage progression within-rank increases offered to staff who perform their duties satisfactorily. This also includes promotion between ranks, which has resulted in a degree of grade-inflation.

On average, the public service is now one full rank more senior today than it was in 2006/07. Between 2006/07 and 2019/20, average remuneration in the public service more than tripled, from R136 000 to over R415 000. Adjusted for inflation, this represents a 45% real increase over the period.

Public service compensation

There are 1.3 million employees in national and provincial government who received R567 billion in compensation in 2019/20. In the past 15 years, public-service compensation has increased at an unsustainable rate. This figure approximately 1.5 percentage points is faster than the rate of growth of GDP, due to increases in average remuneration.

“Public-service compensation now accounts for the equivalent of 11% of GDP, up from 9% in 2004/05.”

Growth in compensation spending was driven by an increase in personnel numbers and an increase in remuneration. This is according to the 2018 and 2019 MTBPS documents.

Remuneration increase accounted for 77% of the increase in spending on compensation on the main budget between 2006/07 and 2019/20. This even after adjusting 2006/07 salaries for inflation.  Between 2006/07 and 2019/20, total headcounts increased by 16% from 1.15 million to 1.33 million.

Remuneration and per capita GDP

Since 2006/7, average public-service remuneration has increased at a faster pace than per capita GDP and is currently 4.7 times larger. Slow economic growth and high levels of unemployment which suppress per capita GDP are to blame for the growing gap.

National Treasury says this rapid increase in public sector salaries is unsustainable. “The model for setting wages has not been able to moderate the rate of increase of remuneration to weaker economic conditions.”

National Treasury points out that +95% of public servants earn more than the bottom 50% of registered taxpayers. Statistics SA data suggests that public-sector compensation growth has outpaced private-sector compensation growth over the past decade.

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