Govt’s wage bill increases by N$2.6bn
Pay hike for civil servants
An increase in civil servants' earnings will filter through to consumer-related industries as these government employees will have bigger buying power.
The total public service wage bill for 2024/25 will exceed N$35.4 billion and is about N$2.6 billion or 8% higher than the estimate for the previous budget year.The new wage bill makes provision for an increase of 5% in the wages of civil servants.
“This is only the second wage adjustment in over five years, a commendable achievement,” Cirrus Capital said in its analysis of the 2024/25 Budget, tabled by finance minister Iipumbu Shiimi on Wednesday.
“The adjustment should see some benefit flow through to consumer-facing industries later this year, given that government is the single largest employer in the country,” Cirrus added.
According to the latest budget documents, government employs more than 91 000 people. This excludes those employed by the ministry of defence. The latest available data indicated that defence employed nearly 23 000 workers in 2019/2020.
MTEF
After this year, government expects the wage bill to grow at controllable levels, Cirrus said. The bill is expected to grow at a compound annual rate of 2.4% from 2024/25 to 2026/27.
Next year, personnel expenditure is budgeted at nearly N$36.4 billion, followed by nearly N$37.1 billion in 2026/27. “While government has historically been successful at holding off civil service wage adjustments or negotiating below-inflation wage adjustments, personnel expenditures remain a key risk to the deficit projections,” Cirrus said.
Ministries
Cirrus pointed out that five largest ministries account for 86% of total personnel expenditure and 31.5% of total expenditure, including interest payments, this year.
“The ministry of education, arts and culture makes up the lion’s share of the wage bill at 40.7%, with the ministry of home affairs, immigration, safety and security in second place, taking 16.7%.”
Personnel expenditure growth in the five ministries is expected to be different from 2023/24 to 2024/ 25.
“The expenditures for Vote 13 (health and social services) and Vote 39 (home affairs, immigration, safety and security) are expected to grow 15.4% and 12.4% year-on-year, respectively.
“The ministry of finance and public enterprises, on the other hand, expects to cut its own wage bill by as much as 37.5% y/y, down to N$329.7 million.
“The personnel expenditures at the ministry of defence and ministry of education, health and culture – the two largest employers – are expected to grow 3.0% and 7.8% y/y, respectively,” Cirrus said.