Govt struggles to cut N$32bn wage bill
Shiimi says cautionary recruitment not bearing fruit
Treasury says very little progress has been made in meeting President Geingob's desired target of reducing government's wage bill.
Finance minister Iipumbu Shiimi says the government has still not found a workable solution to reduce the N$32 billion wage bill of the approximately 107 000 civil servants in their employ.This means that for the 2023–2024 national budget, public wages will gobble up about 38% of the N$84.6 billion national budget.
Shiimi recently said assessments conducted by the Office of the Prime Minister to find a solution to reduce the bill – one of President Hage Geingob’s key targets when he was first elected into office in 2014 – did not yield the desired results.
Shiimi made the comments last week during a workshop held to discuss the upcoming medium-term budget review.
"The difficult one is the wage bill. That [assessment] is being managed by the prime minister’s office. They have assessed some areas where we can make some savings, but the conclusion was not very strong, so that’s something. That assessment still has to continue to see how best to achieve that objective of reducing the wage bill," Shiimi said.
Reduce by half
In March this year, Geingob tasked the Public Service Commission (PSC) to review the bloated civil service. He said if possible, the number of 107 000 civil servants should be halved in line with efforts to reduce the government wage bill.
The president said there is a need to address the bloated public service, explaining that its large size was a result of the government being inclusive of all Namibians, especially those who were marginalised during the apartheid era.
"Africans were left out; freedom fighters were left out after independence, and the idea was to bring them in after independence. The constitution was also clear that you cannot fire those who were there – they were protected. So we had to bring new people on top of those who were already there," Geingob said during a State House engagement in March.
The efforts were aimed at creating jobs for the unemployed. He, however, pointed out that the PSC was not executing its function according to expectations.
"You are failing to do that. I am giving you people a new task, the size of the public service must be looked at," he said.
The president said it was difficult to approve salary hikes for civil servants under the current circumstances, where the wage bill is already excessively high.
Baby steps
While current efforts to reduce the wage bill were not bearing the desired results yet, the government’s decision not to recruit en masse was a small win, Shiimi said.
"I think there have been some small wins in the sense that the government has not been hiring more people. I think it is helping in some way; the numbers have gone down slightly in the sense that if you decide to create a new position, you have to give up an old one, but we need more than that," the finance minister said.
In 2017, the government announced it was looking at offering early retirement packages to civil servants who wished to retire before the age of 60 as one of the solutions to cutting the wage bill.
In 2019, a study by First Capital Namibia found that government could save N$670.5 million annually if 40% of civil servants aged between 55 and 59 years were instantly placed on early retirement.
Government wages cover the remunerations of political office-bearers, civil servants and uniformed personnel.