Swaziland: IMF gives Govt two-year ultimatum
The increment percentage will this year see government shelling over E300 million into the already ‘bloated’ government wage bill, which for some years, had been described as close to suicidal by international finance institutions like the International Monetary Fund (IMF), which had given government up until 2009/2010 to balance the wage bill with the country’s deficit.
According to Dumisane Masilela, the Principal Secretary in the Ministry of Finance, the increment was slightly above their target, which means it is the economy that will have to cushion the discrepancy.
Responding to this newspaper’s query as to what the public sector salary increments meant to the country’s economy, Masilela stated that it was higher than the projected budget, as proclaimed by the Minister for Finance in his budget speech earlier this year.
“In fact, we have risen from 8.5 percent to 10.5, which shows that we have gone two percent higher instead of going lower than the 8.5 percent, or worse still, than the projected deficit, which means we are slightly above the projections. This can mean a lot of things and we are comforted by the fact that such figures do not represent or are not comparable with other SADC states.”
It is worth noting that the country’s treasure trove was diminishing by the day, with a looming reduction of receipts from the Southern Africa Customs Union (SACU) to Swaziland slated for 2010, and the recent increments may spell doom for the country’s workforce if they are not controlled immediately.
The SACU receipts represented the largest source of revenue for the country.
“We have countries like Botswana, for example, where the police and teachers are not under the public sector as is the case in Swaziland. This tends to push us more into the quagmire while in reality this would not be the case had we had such sectors outside the public sector.”
He continued that all was not critical as we were 1.4 percent of the Gross Domestic Product when the critical ratio was 3 percent.
“Indeed, the IMF said we should drastically reduce the deficit down to 0 percent by 2009/2010 if we are to balance the budget and we are working around the clock to achieve this figure and obviously the recent increments will have an effect on this quest. We have managed to attain some surplus but if the trend will continue like this it can be said that we are teetering on the brink of collapse.”
He said this while cognizant of the fact that the public sector unions shall again next year push for more than what they got this year, which will exacerbate the problem, making it more dire.
He said some of the problems causing this are the fact that wage increments are today pegged against inflation, which also was dangerous for any economy.
“Indexing wages to inflation equally pushes demand up. There is not much we can do about this as most workers are today unionised. It is always better when wage increases are indexed to productivity, but we cannot do much now except to make the union leaders understand this problem and clearly elucidate it to their membership. But we are currently working hand in hand with the union leadership and we hope as time progresses, they will tend to appreciate the problems as they are.”
He noted that another problem was that when the public sector, being the largest employer, gets a wage rise, the non-public sectors tend to be influenced by this and also file similar demands with their employers.
“All these factors have an impact on the economy and when the non-public sectors demand their share using the public sector rise, the apple-cart is obviously upset with more demands being put on the table, further causing economic woes. But for now, there is no need to press panic buttons, even though it must be clearly stated that the increment will indeed impact negatively on the economy.”