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South African government employs more staff than the private sector and has more people on the state payroll than the US Federal government

September 8, 2013

THE government in South Africa now employs more staff than the private sector. We have more people on the state payroll than the US, which has a population six times the size of ours and a gross domestic product (GDP) some 45 times bigger than ours.

We employ 3.03-million against the 2.79-million at the federal level who work for Uncle Sam. And our African national Congress (ANC) leadership piles them on, adding 44,000 in the first quarter alone. This, while unemployment in the private sector rose.

Public service costs in South Africa are proportionately among the highest in the world at about 12% of GDP. Mike Schussler of economics.co.za said he believed it was closer to 14%, taking state-owned enterprises such as Eskom into account. This compares with Russia (3.7%), Brazil (4.4%), Nigeria (4%), Rwanda 3.5%) and Egypt (6.9%).

Of the total labour force, no less than 22.6% are public servants. The World Bank estimates that most civilian government employment accounts on average for about 11% of total employment.

And you can bet your bottom dollar that the bulk of those 3.03-million civil servants who make up 22.6% of our workforce will back to the hilt a ruling party that has created for them the largest gravy train ever seen in Africa.

Dr Corné Mulder, chief whip of the FF+, told Parliament earlier this year that South Africa has 34 ministers, 33 deputy ministers, 159 directors-general, 642 deputy directors-general, 2,501 chief directors and 7,782 directors. This data was supplied by Minister of Public Service and Administration Lindiwe Sisulu.

This implies that every minister on average has 4.67 directors-general, 19 deputy directors-general, 74 chief directors and 229 directors to assist them in their duties.

Mulder told parliament that 40 years ago there were 18 ministers, six deputy ministers and 18 directors-general. Obviously there has been substantial population and economic growth over that period, necessitating a larger civil service to serve an integrated society, millions of whose members had previously experienced scant benefits from the government. But the rate of increase in our public service is unsustainable. If not curbed, it must lead to swingeing increases of a tax burden already weighing heavily on ordinary South Africans.

In addition, corruption has been rampant, devouring R30bn a year by some estimates. Then there is the employment of consultants, many in corrupt arrangements, which has cost taxpayers more than R100bn and counting.

What we have seen is not a steady, planned expansion to serve the people’s needs but an orgy of jobs for pals, obscene salaries, expensive cars, lavish travel and extravagant bonuses.

Since public servants consume wealth created by the private sector, how are such bonuses calculated and should they be paid at all? A salesperson on commission or a piece worker paid by output can demonstrate what value they have added.

An entrepreneur risks capital and works tirelessly and imaginatively to build a business and is entitled to enjoy the fruits of its success. He or she pays taxes to ensure political stability, the reliable provision of public works and the safety of citizens under the rule of law.

Wealth creation occurs only in the private sector. It is the task of the state to provide an environment of law and order and fairness in which people can pursue their interests. We cannot afford to burden the private sector with the massive and cost of the public sector.

As Henry Hazlitt taught us: “… the larger the percentage of the national income taken by taxes, the greater the deterrent to private production and employment. When the total tax burden grows beyond a bearable size, the problem of devising taxes that will not discourage and disrupt production becomes insoluble.”

• This article was first published in Sunday Times: Business Times

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