Exam (elaborations)
ECS3704 - Public Economics Assignment 03 S1&S2 YEAR 2021
- Course
- ECS3704 - Public Economics
- Institution
- University Of South Africa (Unisa)
Exam (elaborations) ECS3704 - Public Economics
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THE ECONOMIST SCHOOL OF ECONOMICSwww.theeconomistsoe.com
Ralph: 0680779615
[ECS3704]
[ASSIGNMENT THREE S1&S2]
YEAR 2021
, THE ECONOMIST SCHOOL OF ECONOMICS
www.theeconomistsoe.com
Ralph: 0680779615
“Discuss South Africa’s focus on the public sector wage bill as an expenditure
control measure”
INTRODUCTION
The public sector wage bill accounts for a significant fraction of South Africa’s GDP.
National Treasury reports that compensation spending on the consolidated budget
accounts for about 12% of GDP. The consolidated budget, however, is not the sum
total of the public sector because, though it includes national and provincial
government as well as the public entities, it excludes local government (except insofar
as local government receives fiscal transfers from national and provincial government)
and the state-owned companies (Eskom and Transnet being the largest of these).
CONCEPTUAL FRAMEWORK
South Africa spends around a third of its budget on the salaries of 1.2 million civil
servants, including national and provincial officials, doctors, teachers and police.
Public sector wage bill has become so high as this started after the end of apartheid in
1994, the governing African National Congress (ANC) sought to empower millions of
disadvantaged black people, including by placing them in public sector jobs. This led
to government expenditure on public sector salaries more than tripled between 2007
and 2019.
South Africa spends close to a third of its budget on civil servants' salaries and
government spending on public sector wages is expected to continue increasing to 697
billion rand. This increase started after the end of apartheid where government sought
to empower millions of disadvantaged black people by placing them in public sector
jobs.
It has become topical because South Africa want to freeze public sector wages for the
coming three years so as to cut its salary bill and contain a yawning budget deficit.
This issued has raised the risks of strikes by the 1.3 million- strong public-sector
workforce.
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