WINDHOEK – Namibia’s public sector wage bill, which accounts for about 50 percent of government revenue, is one of the highest in the world and should be reduced to between 30 to 35 percent of government revenue in order to be sustainable, finance minister Calle Schlettwein said.
The public service wage bill for the 2018/2019 budget makes up 49 percent of the total budget, which translates to N$28.66 billion.
During the 2017/18 financial year the government committed N$28 billion out of a total budget of N$62 billion, representing a 15 percent increase from the 2016/17 financial year when N$24 billion was spent on public sector wages.
Top ranking government officials have repeatedly made the call in recent years for a reduction of the civil service and on Monday Schlettwein said a viable strategy to achieve this would be not to retrench civil servants but also not to make any new appointments in order to arrest the growth of the civil service. During a meeting with the ministry’s staff on Monday, Schlettwein reiterated that the public sector wage bill has been identified as an internal challenge.
And, because it is an internal challenge, Schlettwein stressed that the problem must be fixed internally as the current level of the wage bill is too high and is crowding out other, equally important, national objectives.
“If the wage bill is not rectified we will have to borrow more. The more we borrow, the more we burden the youth and our children and this is not a sustainable way to manage our national economy,” he briefed his staff.
In addition, Bank of Namibia Governor Iipumbu Shiimi yesterday repeated his concern regarding the escalating public sector wage bill when he briefed President Hage Geingob and Cabinet on the state of the economy.
“The wage bill has become significantly higher and is taking up valuable resources that are needed in other sectors that are also critical for the well-being and the growth of the economy,” said Shiimi.
He also confirmed that Namibia’s public wage bill accelerated at a faster pace over the past five years than those of its peers in the region.
Shiimi explained that at 16.3 percent of gross domestic product (GDP), Namibia’s public wage bill is higher than the SACU average of 9-10 percent and that of many other countries in the world.
“The right level of the public wage bill is not where we are now and it needs to slow down, which is something that we will continue to say. We need to reduce the wage bill, but without hurting employees. I believe the policymakers have taken note of that, hence action that we see being taken at various levels. I believe we are all on the same page,” said Shiimi during an earlier interview.
Government announced in 2016 that certain positions in the public service would not be filled in a bid to save on costs and reduce operational expenditure. Some of the proposed measures include streamlining the multiplicity of bonuses and allowances as well as reviewing medical aid coverage.