CIVIL SERVANTS’ SALARIES 50% HIGHER THAN PRIVATE SECTOR’S

MBABANE – Salaries of civil servants are 50 per cent higher than those in the private sector, says a World Bank Report. This was disclosed during the launch of the Eswatini Public Finance Review produced by the World Bank. The Eswatini Public Finance Review was officially launched yesterday at the Hilton Garden Inn by the Minister for Economic Planning and Development, Dr Thambo Gina, in partnership with the World Bank, the Ministry of Finance, as well as the Ministry of Health. This is the first Public Finance Review (PFR) since 1996.  The PFR examines and analyses options to improve the efficiency and effectiveness of public expenditure and revenue mobilisation, in support of sustainable and inclusive economic growth.

Opportunity

Minister Gina said the PFR provides government with a critical opportunity to assess its policies, challenges and opportunities. During the official launch of the PFR, the delegates of the prestigious event were taken through the content of the document by Senior Country Economist for the World Bank, Marko Kwaramba.  He took the delegates, including three Cabinet Ministers—Neal Rijkenberg, Dr Thambo Gina, and Appolo Maphalala, who represented the Minister for Health, Mduduzi Matsebula—through Eswatini Expenditure Management, which entails how the country could strengthen public financial management to support fiscal consolidation and promote expenditure efficiency.

The senior economist lauded Eswatini for coming up with the Southern African Customs Union (SACU) Stabilisation Fund, which has cushioned the country as the receipts declined in the next fiscal year.  He, however, pointed out government expenditure arrears, stating that they constrain the public sector. He noted that the expenditure arrears were five per cent of the gross domestic product (GDP) in 2023/2024, but are now sitting at around 2.7 per cent of the GDP, which he said is still too high. The senior economist stated that there is a need to address structural challenges in Eswatini to boost growth. He said the challenge lies in the wage gap between the public and private sectors.

“In Eswatini, the gap is too large in such a way that civil servants are being paid more than the private sector,” he said. He emphasised that, compared to other countries, the public sector wage bill premium is high in Eswatini. Kwaramba noted that the large gap between the public and private sectors in Eswatini impedes private sector competitiveness. This comparison was made with other countries such as Liberia, Ethiopia, Tanzania, Lesotho, Malawi and Namibia.

These statistics, he said, were taken from the World Wide Bureaucracy Indicators (WWBI), which showed Eswatini to be among the countries with a huge gap. Eswatini was second to Namibia, which has a gap of around 70 per cent. In Eswatini, the gap in salaries between the public and private sectors, according to the presented statistics by the economist and the PFR document, is said to be around 60 per cent, while Malawi has a gap of around 47 per cent. In Liberia, the gap is just 20 per cent. He said the average in other countries is 12 per cent, thus making Eswatini among those with a higher wage gap.

After the statement, there was a lot of murmuring and rowdiness in the room, especially from the civil servants from the ministries that had attended the event. The economist explained that the 50 per cent gap between wage premiums, with the public sector being the highest in Eswatini, largely depends on the profession. “At a lower level, the gap is not high, but at the middle level, it is high. However, if you are higher in the level, the gap is reversed. The gap is around 61 per cent higher in the public sector than in the private sector,” he said.

Kwaramba added that the average wage of a civil servant in Eswatini was 2.5 per cent higher than in the private sector.  He said if the private sector, especially in the professions where the wage rate is lower than that of government, were to match that of the government, it would erode profits and its competitiveness.  With the ongoing salary review, he noted that the wage bill was uncertain, as the Establishment Register has projected that there would be a decline in civil servants in the coming financial year. 

He noted that there were professions where the private sector paid more than government, but on average, government in Eswatini pays more than the private sector.  The report also shows that recurrent expenditures make up the largest share of total spending at 25.1 per cent of GDP in 2023, whereas capital investment accounted for only 6.2 per cent.  Wages account for 10.4 per cent of spending, followed by current transfers spending at 5.9 per cent. By functional classification, general services stood at 7.1 per cent of GDP, and economic affairs (which includes agriculture, energy and transport) at 6.5 per cent of GDP.  These jointly account for almost half of the expenditure in Eswatini.

Bill

The four critical spending areas include the public wage bill, health, education, social protection, public investment and transfers to State-owned enterprises (SOEs).  The report highlights that Eswatini has a large public sector, with one-third of GDP devoted to public spending. The oversized role of government, coupled with an uncompetitive business environment and the high cost of doing business, has constrained the growth of the private sector.

Public expenditure stood at 31.3 per cent of GDP in 2023, higher than most peers. For 2016 to 2022 averages, public expenditures stood at 28.6 per cent of GDP, much higher than the average for regional peers, which was 21.1 per cent, and structural peers, 25.5 per cent. Although Eswatini allocates a larger share of GDP to public spending than its peers, its score on the 2020 Human Capital Index is relatively low at 0.48, well below that of Mauritius (0.62), Costa Rica (0.63), Estonia (0.78), Singapore (0.88), and the average for lower-middle-income countries (0.48).

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