LETTER: Halting the decline
The government must cut the public sector wage bill and stop middlemen profiting from public procurement
At the risk of stating the obvious, I do not think getting SA Inc out of its downward financial spiral is too complicated. We have to do two things.
One, arrest the public sector wage bill. It is well documented that public servants are paid above market value by as much as 40%, and yet still get inflation-plus wage increases.
Investec economist Annabel Bishop says according to her model if this came down to inflation only R90bn would be saved over three years. So imagine what we could save if it came down to inflation minus a percentage point or two. And it should, given that the pay differential mentioned above needs to be narrowed over time.
Second, the costs of public procurement, including state-owned enterprises (SOEs), is hugely inflated by middlemen — the so-called service providers. The Treasury should curtail this practice forthwith.
On the first of these actions the president has to decide who calls the shots in this country — him or the public sector-dominated unions.
On the second the Treasury has to decide whether public money should be spent as carefully and with as much common sense as most households have to, or whether public money is there for the benefit of the middlemen, who add little value but who are good at inflating costs.
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