The government wage bill: Employment and compensation trends in South Africa

Michael Sachs, Arabo Ewinyu & Olwethu Shedi | 2023 | Development Southern Africa

This paper reviews government employment and compensation trends using data derived from the government’s payroll. Employment levels and average pay grew strongly in the 2000s, but in the last decade, headcounts have stagnated or fallen, and increases in average pay have been moderate. The distribution of pay between government employees is compressed, especially when compared to income inequalities in society. The paper suggests attempts to reduce government’s wage bill that rely on blunt, across-the-board measures will have their largest impact on core public services – basic education, healthcare and criminal justice – and are likely to erode the value of these services and the quality of service delivery.

Austerity without Consolidation: Fiscal Policy and Spending Choices in Budget 2023

Public Economy Project | Michael Sachs, Rashaad Amra, Thokozile Madonko and Owen Willcox | June 2023

Here are some slides of the same paper I recently presented at NEDLAC. The paper sets out our analysis of the last budget in light of recent fiscal trends. Spending cutbacks have strongly intensified since the Covid-19 pandemic, with pay increases for government employees held well below the inflation rate and across-the-board spending reductions cutting deeply into healthcare, basic education, criminal justice, and social services. Despite this, the nominal boom

Budget 2023: Analysis by the public economy project

Public Economy Project | Presentation to Parliament on the 2023 Budget | March 2023

The 2023 Budget is presented in the context of multiple crises facing South Africa. The growth outlook has deteriorated since the tabling of the MTBPS, with load shedding, rail export constraints, and the operational crisis of local government all playing a decisive role in constraining South Africa’s growth prospects in a context of global uncertainty. There is notable uncertainty on the policy issues critical for proper fiscal planning. Political incoherence at the centre of government makes effective planning, budgeting and oversight nearly impossible. This is increasingly affecting the quality of budget institutions and reporting.

Thinking about the 2022 budget policy statement

Public Economy Project | Presentation to Parliament on the 2022 MTBPS | October 2022

Emerging weaknesses in the medium-term budget framework suggests the need for a discussion about fiscal institutions.

Public services, government employment and the budget

Public Economy Project report | October 2022

This draw inferences about the impact of budget choices on the allocation of real resources to core public services: basic education, healthcare and criminal justice. There have been significant reductions in the real value of these services, and if fiscal consolidation proceeds as planned, the worst is yet to come.

Spending choices in budget 2022

Michael Sachs, Arabo K. Ewinyu and Olwethu Shedi | Working Paper | Southern Centre for Inequality Studies | July 2022

This report offers an independent appraisal of expenditure choices implied by the budget numbers tabled by governement. It presents National Treasury budget data in a form that is accessible and policy relevant. The analysis may not be uncontroversial or “neutral” but is balanced and grounded in evidence

Fiscal Dimensions of South Africa’s Crisis

Working Paper | Southern Centre for Inequality Studies | March 2021

How did South Africa arrive at the fiscal crisis it currently faces? It was once thought that the democratic breakthrough of 1994 had heralded a “fiscal renaissance”, but the institutions and policy certainties that undergirded this confidence now face a bleak and painful reckoning. In search of answers, this paper traces fiscal data and policy development over the last two decades.

Devil and the deep blue sea: South Africa’s 2021 budget

Article |  New Frame (this  a revised version of the published article: the original and responses to it are here) | 8 March 2021

The challenge we face is a real dilemma. On the one hand, the government’s commitment to reducing its budget deficit will mean forcing down the real income of public servants, and real hardship for millions of South Africans. On the other, we need to take the problem of debt sustainability seriously.

FFC supplementary comment on Budget 2021 and the Bill of Rights

Submission | Finance and Fiscal Commission | 5 March 2021

The Finance and Fiscal Commission is concerned that government has not adequately considered the impact of Budget 2021 on the rights set out in South Africa’s constitution. This submission was made to Parliament’s Standing Committee on Finance on 5 March 2021.

Macro policy in the pandemic: Fiscal imperatives and financial considerations

Slides | CDE webinar | 24 April 2020

The macroeconomics of the cornavirus shock are unique. This implies the need for large fiscal operations. The cost of not financing these operations is unambiguously greater than the cost of financing them. But government faces a binding fiscal constraint.

Fiscal policy and the coronavirus crisis in South Africa

Slides | Presidency workshop | 16 April 2020

Policy objectives during the period of lockdown should include (1) stabilising income flows to prevent a consumption shocke (2) providing “bridging finance” to protect firms and households from bankruptcy and hunger, (3) provide breathing space for an adjustment to lower income and (4) distribute the burden of adjustment equitably.

Macro-fiscal considerations in response to the COVID-19 crisis

Memo | Covid19 Economy Group | 6 April 2020

This memo aims to frame discussion about fiscal and financial considerations in response to theCovid19 shock. The current focus on action related to the management of the three-week lockdown is appropriate but as the weeks of economic dislocation turn into months, the force ofnecessity may trigger unprecedented fiscal, financial and monetary action. In this context, theappropriate use of the broader public balance sheet will become increasingly important.Government should consider identifying options and planning their execution, so it remainsahead of events.

Austerity without consolidation

Slides | 20 Febraury 2020 | GIBS Economic Outlook Conference

Over the last fifteen years there has been a large increase in resources available to the Gauteng health department. These resources have been absorbed by a wage shock, a surge in employee headcounts, new allocations for HIV and AIDS and a shift from hospitals to primary services. For the average hospital in-patient, this feels like austerity.

“Both directions at once”: Fiscal policy in South Africa

Article | New Agenda:South African Journal of Social and Economic Policy | 2019

John Coltrane once described his approach to the improvised solo as “start in the middle and move both directions at once”. This is an inspired approach to artistic creation but not a good basis for fiscal policy. Yet government is doing just this, attempting to move backwards and forwards at the same time. The consequences are pulling apart the public sector.

Gauteng City Region: Development and change

Slides | Faces of the City Seminar, Wits University | 4 June 2019

Gauteng is preeminant in the devleopment of the national and regional economy. But over the last decade, rapid population growth (largely due to internal migration) has taken place in the context of economic stagnation and rising unemployemnt. In the face of these pressures governement has improved the quality of life in important respects. But rising social, economic and spatial polarising threatens a path of maldevelopemnt that will undermine economic expansion and foreclose possibilities for social includes. This calls for a refocussing of the concept of the Gauteng City Region around soical policy and spatial integration.