The Government of Eswatini’s plan to implement the long-awaited salary review for public servants has ignited a national debate about fairness and affordability. For thousands of civil servants who have endured stagnant pay for almost a decade, the move feels overdue. Yet, economists and fiscal analysts warn that while a salary hike will ease household pressures and lift morale, it could also strain national finances and threaten the country’s cash flow stability if not managed prudently.
There is no doubt that higher public-sector wages can boost short-term economic growth. When civil servants earn more, they spend more on groceries, transport, school fees and housing. This spending will stimulate domestic demand and supports local businesses. Since household consumption accounts for the largest share of Eswatini’s GDP, this injection of spending could temporarily lift growth. Some additional tax revenue may also flow to government as higher earnings translate into higher income and sales taxes.
However, this is only one side of the story. The full cost of the salary review is estimated at around E1.6 billion, yet only E500 million has been budgeted for 2025/26. That gap represents a major fiscal challenge in an economy where the wage bill already consumes nearly a third of total government expenditure and roughly 10 per cent of GDP, one of the highest ratios in Southern Africa. When such a large share of revenue goes to salaries, less remains for essential services, infrastructure and investment.
If government proceeds without corresponding increases in revenue, it risks deepening the structural imbalance between income and spending. Treasury reports already show that Eswatini occasionally struggles to meet monthly obligations, sometimes leading to delayed supplier payments and arrears. A higher recurring wage bill will intensify those cash flow pressures. Worse still, Eswatini’s main income stream, the volatile SACU receipts, depend on external trade performance, not local policy. A downturn in SACU inflows would leave the State exposed, with fixed salary commitments that cannot easily be reduced.
Government should prioritise improving tax revenues and internal revenue mobilisation to strengthen fiscal resilience and minimise cash flow pressures. A broader, more efficient tax base would reduce dependence on volatile SACU receipts and ensure predictable funding for salaries, services and development projects. Enhancing domestic revenue collection through better compliance, digital systems and enforcement would stabilise government finances, prevent payment arrears and create room for sustainable investment, without resorting to excessive borrowing or budget cuts.
Beyond liquidity, the composition of spending also matters. When recurrent costs dominate, capital investment suffers. Public sector wage costs are crowding out operational and development spending. This means that while more people may receive salaries, the quality of public services and infrastructure could stagnate. In effect, the country might be paying more without achieving more.
The relationship between wages and productivity is another key issue. Salary increases that are not tied to improved efficiency can trigger inflation, instead of real growth. More money circulating in the economy without a matching rise in output raises prices, eroding the very purchasing power the review intends to restore. To prevent this, government must link salary adjustments to clear performance targets and service-delivery improvements. Pay should reward productivity, not merely seniority or tenure. The salary review also has implications for the private sector. When the State raises pay substantially, private employers may face pressure to follow suit, even if their revenues cannot support it. That could push up business costs and weaken competitiveness. Given the fragile state of the country’s private sector, which is characterised by slow growth and high operating expenses. Government must ensure its wage policy does not distort the wider labour market.
Still, civil servants have a legitimate case. Over the past years, the cost of living has risen sharply, while wages have remained flat. Their real incomes have fallen, undermining morale and service quality. A reasonable adjustment, phased in gradually and linked to fiscal capacity, could restore motivation and improve productivity. However, it is imperative to safeguard CAPEX, which is expected to drive growth in the medium-term.
It is imperative that capital investment be protected. Cutting infrastructure projects or maintenance budgets to fund salaries is a short-term fix that undermines long-term growth. Government must ring-fence funds for roads, schools, health facilities and industrial parks which are the drivers of future employment and private-sector expansion. Balanced budgeting means investing both in people and in the systems that create jobs. We note that with this budget overshoot on the wage adjustment requires budget re-alignment on supplementary budgeting.
It is important that government finds alternative savings and not gun for CAPEX expenditure. Our five per cent growth target as a country remains largely on hinged on flowless execution of our mega infrastructure projects. History tells us that in most cases given the heavy nature of recurring expenditures, such costs re-alignments are often financed through cuts on projects and this will minimise the growth impacts of project-based growth. The country must balance fair pay with fiscal prudence, safeguarding capital investment to sustain growth.
When civil servants earn more, they spend more on groceries, transport, school fees and housing. (Pic: DebtWave Credit Counseling)