Ramaphosa’s salary plan shows he’s serious about reducing public spending
Even if politicians take the 4% increase proposed, it will leave them poorer as the raise will be below inflation. says an economist.
FILE PHOTO: South African President Cyril Ramaphosa speaks in parliament in Cape Town, South Africa, February 20, 2018. Picture: REUTERS/ Sumaya Hisham/ File Photo
President Cyril Ramaphosa’s freeze on executive, parliamentary and provincial office-bearer salaries is a welcome announcement, but according to a leading economist it will take a lot more than “symbolic gestures” to improve things – including cutting his Cabinet by 75% and senior government managers and CEOs of parastatals by half.
All the economists canvassed by The Citizen said Ramaphosa’s move was merely symbolic, to demonstrate to investors that he was serious about reducing public spending. His announcement was a good political statement that may signal the start to future financial prudence, or could merely be 2019 electioneering.
Efficient Group chief economist Dawie Roodt said it was well and good for the president to do this, but a true signal of intent would be for him to cut his Cabinet by 75% and drastically down-size the civil service, especially the huge middle-level management echelon.
He was adamant Ramaphosa was merely making a political statement unless he cut the Cabinet, trimmed the civil service at senior and middle level and CEOs of state owned enterprises by half. He argued the latter were CEOs in no more than name, because they were inefficient.
“The government can save tens of billions of rand not only in salaries, but benefits and allowances that cost a lot. Ministers like Malusi Gigaba and the minister of basic education do not deserve their salaries, because Gigaba was responsible for so much damage in the SOEs and there is mess in education,” Roodt said.
The total value of salaries earned by Cabinet members and other political office-bearers was not going to make a difference in terms of finances. “You have to cut where it matters the most, from senior and middle-management levels. There is a huge number of civil servants, especially the middle managers and that fat needs to be cut,” Roodt said.
Economist.co.za chief Mike Schussler said Ramaphosa’s announcement was a “powerful political statement” that would send good signals that the government was serious about stopping public waste.
“We are on a fiscal cliff and the move shows that our leaders are leading by example. It will send a clear message to the CEOs of state-owned enterprises, mayors, councillors, directors-general of government, and MECs that something needs to be done to reduce spending.”
SA’s two major trade union federations, Cosatu and the South African Federation of Trade Unions commended Ramaphosa. “We are happy the president has risen to the occasion. It should not make sense to reward people who are already well paid when the workers and their families suffer due to low wages,” Cosatu spokeperson Sizwe Pamla said.
This was echoed by Saftu general secretary Zwelinzima Vavi, who said it was commendable the president made the gesture when he and his executive earned far less than the CEOs of SOEs. The president earns about R3 million per annum, while SOE chief executives received between R5 million and R8 million per annum.
Sam Rolland, economist at Econometrix, said even if the politicians took the 4% increase proposed, it would leave them poorer as the raise would have been below inflation.
“It is symbolic to the investors that the government is prepared to reduce public spending, but I don’t think it will make a huge impact on the fiscus,” said Rolland.
He said Ramaphosa was in a Catch-22 situation as there was a need to cut the wage bill, and reduce the public service via retrenchments to make the fiscus more manageable.