GOVT STOPS PARASTATALS’ RESTRUCTURING, SALARY REVIEW

MANZINI – State-owned enterprises (SOEs) have been ordered to suspend their restructuring and salary review processes as a consultant has been recruited.

According to sources, the decision to suspend these processes was communicated to the parastatals in order to align the salaries of personnel. The sources claimed that a disparity had been noted and that there was a widening pay gap between executives and junior staff within the 50 SOEs.The disparity in the remuneration of the personnel was said to be a major contributor to inequality in the workplace and in the country, and had seen some chief executive officers (CEOs) earning exorbitant salaries, which was the opposite of what junior personnel were paid.

The sources claimed that a contributing factor to this widening gap in the remuneration structure is that the best performing entities are able to effect a cost-of-living adjustment (CoLA) annually, while those which are not able to do so trail behind. The sources said the issue was raised in February when Prime Minister Russell Dlamini met with CEOs and Board members of the parastatals. The suspension of any salary reviews pending the finalisation of a review by a consultant was confirmed by the Minister of Finance, Neal Rijkenberg.

He said the suspension is meant to ensure that there is uniformity within the SOEs and further assist those who are not performing well to afford to recruit the best personnel. Rijkenberg said a gap had been formed between the parastatals in that those which were not able to be self-sustaining were implementing minimal increments, which resulted in their human resource seeking greener pastures, while also ensuring that they were not able to recruit the best personnel due to their minimal remuneration offers. It is worth noting that some of the parastatals seek government’s subventions despite that their CEOs earn quite substantial amounts. The country spends over E141 million on salaries of just 50 CEOs per annum, despite being in the financial doldrums. The CEOs earn a maximum of E150 000 a month, while the less paid earn around E75 000 per month.  

Challenged

On the other hand, there are financially challenged enterprises like the Pigg’s Peak Hotel and Eswatini Television Authority (ESTVA), which require government’s input in order for them to continue operating.  Scholars have noted that the Finance minister needs to allocate a budget that would implore government departments and enterprises to be self-sufficient. This would make sure that every cent awarded to any of the entities is accounted for. Several entities cannot meet obligations because of weak revenue growth, high compensation costs to employees due to over-staffing and debt servicing costs, which have accumulated over the years and are now weighing down on profitability.

Currently, there are 50 SOEs and according to the Eswatini Economic Policy Analysis and Research Centre (ESEPARC) report, Eswatini’s parastatals are now a huge burden on the economy and on the fiscus, with transfers to Category A  parastatals being about E2.4 billion in 2020/21.The SOEs Restructuring Framework in Eswatini Report, which was compiled by the ESEPARC, recommended that the SOEs should be merged to about 31 in total. This report was published on November 31, 2021, and presented to the 11th Parliament, before launching the first phase of the merger of SOEs.

However, the speed at which things are happening has led some economists to bemoan that financial resources, which could assist the country to stop heavy reliance on the Southern African Customs Union (SACU) receipts were going to ‘waste’. ESEPARC, in its study, stated that even if an entity is profitable, there could still be economic reasons to consolidate it. It stated that this exercise is necessary to resuscitate the economy and improve the fiscal space for funding social and economic development. It highlighted that there is a need to avoid or stop monetised mandates, but focus on government’s core business – its development mandate.

“The enterprises need to chase development instead of chasing profits. The SOEs are an extension of central government; they are specialised semi-autonomous departments that are implementing government’s development agenda in a flexible and agile manner,” it reads in part. ESEPARC reported that the issue of human deployment in these parastatals also needs rationalisation, as the PEU Act has created another central government within these SOEs, starting at Board level, down to the operations of the individual public entities.

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