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Research and analysis group Intellidex has published a new report looking at the salary of public sector workers in South Africa and how increased public spending can be successfully addressed.
The report, which was commissioned by Business Unity South Africa (BUSA), proposes the introduction of a ‘state-centered social pact’, an agreement that would have government and public sector workers agree to minimum standards for both wages and salaries. for productivity.
Intellidex said that this compact would have three essential components:
- An agreement on the relationship between payroll costs and GDP and tax revenue that is sustainable;
- An agreement on the terms during which the adjustment will be made; Y
- An agreement whereby the government, public sector unions and companies will work together to develop productivity improvement plans for the public service.
While the first two points are fine settled downIntellidex said it is also key that the government enter into a “public sector productivity pact.”
“Historically, public sector unions have resisted government attempts to implement any kind of initiatives to improve productivity,” the group said.
“Teacher unions, for example, have resisted the introduction of standardized national tests below the matrix, the annual national assessments, for fear that they would become a performance-related payment mechanism.
“They have also resisted technologies to track time and attendance, as well as even the mundane supervision of school inspectors.”
In the context of underperforming utilities and a compelling need to control costs and improve productivity, this approach is futile, Intellidex said.
“It is essential, therefore, that the government and companies seek to engage with unions to help design and participate in a rigorous, reliable, transparent, credible and legitimate process aimed at generating a deeper understanding of productivity challenges in the public sector and how to approach them. these.”
Intellidex said that companies, which have mobilized a large fraction of South Africa’s consulting talent in developing their proposals for an economic recovery strategy, could make a similar commitment to such a program.
“Doing this well would be a very important undertaking. However, the value of success would be extremely high. It is, therefore, a project that could become central to any process of social compaction ”, he said.
“Work always wants to know what businesses are bringing in, and this could be a key offering that we think adds value.”
Productivity
While public sector remuneration has grown very rapidlyAt a rate that far exceeds the growth rate of the economy, few believe that the value added by public service has increased at a rate of wage growth, Intellidex said.
“In fact, it is somewhat fanciful to think that production levels have even remained flat, and they are much more likely to have declined”Said the group.
“The divergent trend of wage growth that is faster than the GDP growth rate combined with the decline in public service output implies a rapid decline in public sector productivity. “
Intellidex said that addressing this is critically important if South Africa is to get value from the 35% of national resources consumed by the public sector.
“We believe that a key proposal should be for the government to embark on a process of rigorous productivity reviews across all its major functions, each aimed at helping find mechanisms to increase production significantly within existing budget constraints,” he said .
Because this is public service, the job would be a bit more politicized and, ideally, organized workers would be a willing partner in the effort, Intellidex said.
A different kind of difficulty is that, unlike the private sector, it is impossible to reduce all public services to a common denominator, the group said.
“In the private sector, any decision can be reduced, at least in principle, to a calculation of the net present value (NPV) for shareholders of the cash flows associated with investments, product changes and process changes.
“In government, it is not so easy: the monetary value of many of the goods and services produced cannot really be calculated and, in any case, the distribution of those benefits (or changes in those benefits) is at least as important as its absolute value “.
“The challenge is real, therefore, but, in a context where the quantity and quality of public services are believed to be declining even as the cost of providing them is increasing, the potential value to society of doing a ‘ good enough ‘the productivity review is potentially huge,’ he said.
Read: This is what the average public worker in South Africa gets paid
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