Cape Town - For the second time in as many months ANC parliamentarians have pooh-poohed serious warnings about the country’s current economic direction.
On Tuesday ANC MPs remonstrated with one of South Africa’s top economists for his “exaggerated” figures on job creation, social grants and the future “wealthy” public service.
The economist, Mike Schussler of Economists.co.za, made these assertions in a submission on the national budget to a joint sitting of the parliamentary finance committees.
He sketched a sombre picture of the economy’s ability to meet government’s ambitious job-creation targets and warned about high wage increases in the public service and the little protection afforded small and medium-sized (SME) enterprises.
But these warnings were scorned by the ANC.
Last year ANC MPs also angrily repudiated warnings by the International Monetary Fund (IMF) that reform was needed in the country’s wage-negotiation structures if the country was to achieve 6% or 7% growth (to create jobs) in the short term.
Various ANC MPs, including Edwin Chaane, a member from North West, accused Schüssler of exaggerating and using incorrect data.
Schüssler stressed that his information had been based on figures from Statistics South Africa.
The budget tabled by Finance Minister Pravin Gordhan
last Wednesday focused on job creation, continued state expenditure on infrastructure and social grants financed from increasing state indebtedness.
This budget needed to manage government’s target of creating five to nine million jobs over the next decade.
Schüssler said South Africa’s public service wages matched those of wealthy countries and were the seventh highest in the world. They were still rising and could soon outdo those of Portugal and France.
Public service remuneration contributes 12% to the gross domestic product (GDP) and accounts for 40% of the R977bn government expenditure in the 2011/12 financial year.
Public service pay and increasing state indebtedness are the two fastest rising budget items.
Gordhan has had to budget almost R40bn more over the next three years owing to wage adjustments.
In 2011 the average individual wage at Eskom will surpass the R500 000 mark, said Schüssler.
This makes South Africa the third best paying country for government institution employers after Sweden and France. High public service earnings are a global trend, but this is quickly changing – not only in South Africa, said Schüssler.
The average monthly public service salary has in recent years continued to be twice that of the private sector.
Public-sector hiring has declined 2.6% over the past four years. In contrast the number of government posts is 15% up.
About 301 000 employers in the SME sector employ four or more people, creating a total of almost seven million positions. This is where the private sector’s job-creation capacity lies, but this group has been swamped by legislation and has declined by 620 000 or 6% since 2000.
Schüssler said to create five million jobs over the next decade the private sector would need to grow 4.9%. The public sector should grow 6.5% and car allowances 13.3%.
To create nine million posts the private sector would need to grow 7.7%, the public sector 10.1% and car allowances 18.8%.
Nowhere in the world has this been possible.
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