21st July 2024, South Africa.
South Africa has the third-largest public sector wage bill as a share of GDP in the world.
Though its economy is smaller, South Africa’s wage bill is 10.5% of its GDP. This is higher than in the USA, UK, Australia, and Japan. Only Iceland and Denmark spend more. Brazil is close behind South Africa. Russia, India, and China spend less than 10% on their public sector.
The South African government has a chance to change its spending after the 2024 general election. This is because 95% of personal income tax comes from 30% of taxpayers, and 97% of corporate income tax comes from 3.5% of companies.
Treasury figures show 37,839 public sector workers earn over R1 million each year. The total pay for civil servants rose from R408 billion in 2013-14 to R721 billion in 2023-24.
This puts pressure on the budget. Debt servicing costs are rising, and labor unions are pushing for higher wages. There is a risk that funds may be taken from other departments and national priorities, like infrastructure, to pay the public sector wage bill and service the debt.