The financial burden of redundant SOE employees

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Staff Reporter

Windhoek-Public Enterprises Minister Leon Jooste has admitted that one of the reasons some state-owned enterprises were unable to produce healthy financial statements is due to the high wage bills they have to carry for redundant employees on their payroll.

He was referring to parastatals that had been asked, for example, by government to employ former guerrilla fighters, many of whom were unemployed after returning from exile at the time of Namibia’s independence in 1990.

However, while it was politically expedient at the time for state-owned enterprises to employ more people than required, the current economic climate has made this nigh impossible, and the situation is worrisome.

Jooste said his ministry is currently working on various possible mitigating solutions, which may include negotiating with unions for retrenchments.

“It was a good intention by the government, but we are now facing challenges in our confined economic environment, in which a number of public enterprises have unsustainable headcounts and are unable to continue carrying the wage bill,” he said.

Jooste, who was addressing the third Annual General Meeting of the Public Enterprises Chief Executives Forum yesterday, said the country would have to start finding solutions to the problem.

“We cannot shy away from that reality,” he said, adding that the Public Enterprises Ministry was working on potential solutions to address the problem. He also warned that retrenchment is not off the table, especially where it is unavoidable.

“We need to start engaging the unions,” he said.
It is estimated that there are currently about 14,000 employees on the payroll of state-owned public enterprises sector in Namibia.

Jooste also noted that a recent assessment by auditing firm Ernest and Young (EY) had found that in most cases the remuneration packages at public enterprises were not competitive enough to attract the required skill.

“We are of strong opinion that to remain competitive we must attract the best. If we fail to do that, [public enterprises] will be failing,” he said.

He further pointed out that part of the problem was the ambiguity of whether those workers employed in state-owned public enterprises are part of the public service or the private sector.

Those who hold the view that employment in the state-owned public enterprises sector is the same as being in the government public service, advocate patriotism above higher remuneration.

However, Jooste is “of the strong opinion that we need to have competitive [remuneration] packages”, in line with the findings by EY.

“Patriotism is not something you can eat at the end of the day,” Jooste remarked.
He said the new remuneration guidelines for public enterprises have been drawn up, but the ministry has been asked to hold another round of consultations before it submits the guidelines to Cabinet.

The implementation of the guidelines would only come into effect when the amendments to the overarching public enterprises governance legislation are done. Currently the Public Enterprises Governance Bill remains a work in progress, with Jooste saying it requires more input from a number of ministries.

The proposed legislation would also introduce new categories of employment for parastatals, other than the system of categorisation on which current remuneration packages are based.

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