A recent revelation in the Medium-Term Budget Policy Statement (MTBPS) has shed light on a substantial rise in the number of government employees in South Africa earning over R1 million annually. Over the past decade, this figure has surged by an astonishing 450%, with approximately 55,000 public sector employees now boasting millionaire status.
The MTBPS report also highlights the remarkable growth of the government employee wage bill. It has ballooned from R408 billion in the fiscal year 2013/2014 to an eye-popping R724 billion in the fiscal year 2023/2024. This extraordinary increase is attributed to government determinations and collective bargaining agreements, regularly reviewed to ensure equity, competitiveness, and alignment with economic conditions and government priorities.
Furthermore, factors such as pay progression agreements, pension contributions, benefits, and various allowances (including overtime pay, housing allowances, and medical aid) are required to be adjusted in accordance with the relevant inflation rate, contributing to the annual rise in the total wage bill.
The data provided in the report unveils a staggering shift, with the number of employees earning in excess of R1 million annually surging from slightly above 10,000 in 2013/2014 to well over 55,000 in 2023/2024. An additional 180,000 employees earn annual incomes ranging from R600,000 to R1,000,000, translating to monthly earnings between R50,000 and R84,000. Remarkably, nearly half of the 1.3 million government employees earn over R350,000 per annum.
South Africa’s government employee wage bill stands out as one of the highest among emerging markets, significantly contributing to the country’s gross domestic product (GDP). Specifically, the wage bill surpasses the average of Organisation for Economic Co-operation and Development (OECD) countries by 3.5%. Over the past decade, the average remuneration per government employee has experienced substantial growth, primarily fueled by above-inflation increases for national and provincial employees.
These substantial increments occurred during a period of weak economic growth and tightening fiscal constraints, further complicating the nation’s fiscal challenges.
The Treasury has identified the public wage bill as one of the primary risks to the fiscal outlook. Remarkably, despite this concern, the majority of South Africa’s public sector unions agreed to a 7.5% wage increase earlier this year after a five-month-long strike. This two-year, multi-term deal significantly exceeds what the government had initially budgeted for in 2023, making efforts to manage the inflated bill an uphill battle. Projections indicate that by 2026, the public wage bill is anticipated to reach R769 billion.
In his MTBPS address, Minister Godongwana announced his commitment to honoring the public sector wage deal struck in March, despite having budgeted for a 4.5% raise. This commitment is expected to entail an additional cost of R23.6 billion for the Treasury, and government departments will need to reprioritize budgeted funds to find the remaining R10.1 billion.
Furthermore, Godongwana outlined the government’s intentions to contain the wage bill through measures such as encouraging employees to opt for early retirement and imposing restrictions on the filling of non-critical positions. Additionally, the government remains dedicated to its plans to “reconfigure” the state by reducing the number of government departments and cabinet positions.