Govt wage bill swells to N$35,4 billion

The government’s wage bill stands at N$35,4 billion for the new financial year, including benefits and a 5% increase for civil servants.

This has been revealed in its 2024/25 budget. The public wage bill caters for 107 000 civil servants.

In the previous financial year, it stood at N$32,8 billion, indicating a jump of N$2,6 billion.

This comes after the International Monetary Fund has said the government’s wage bill is too high, and the state can no longer be relied on to create jobs.

Salaries alone comprise a N$29,4-billion slice of the N$35,4-billion cake, while other conditions of service amount to N$1,1 billion.

The government’s contribution to the Government Institutions Pension Fund is N$3,6 billion, and to social security amounts to N$107 million.

MORE INCREASES

While the government plans to increase its personnel expenditure, the hike is not expected to be more than N$1 billion.

The budget shows the wage bill is expected to increase by N$580 million to N$36,3 billion in the 2025/26 financial year.

In the 2026/27 financial year, it will be N$37,1 billion, which is a N$801-million increase.

The state’s financial year runs from 1 April to 31 March annually.

The budget books show the government has allocated N$1,14 billion to the improvement of its remuneration structure.

The budget explains this amount as payments to government employees, including salary increases and the improvement of other benefits of which the details are to be determined in the financial year.

This increase reflects the 5% increase in civil servants’ wages.

During his budget statement, minister of finance and public enterprises Iipumbu Shiimi said the operational budget increased because of the 5% adjustment in the civil service wage bill at a cost of N$1,7 billion to guard against the erosion of purchasing power. “The wage adjustment is effective from 1 April,” he said.

‘MORE MONEY, MORE PROBLEMS’

Economist Omu Kakujaha-Matundu says Namibia tops the Southern African Development Community list when it comes to its public wage bill.

“The government is well aware of this and has, on numerous occasions, expressed its willingness to create a leaner and more efficient public sector,” he says.

Kakujaha-Matundu says the government is also well aware of the risk of having such a large chunk of the labour force relying on the public sector and has expressed its willingness to reduce it.

Previously, Shiimi sought to trim the wage bill by implementing voluntary retirement in the public sector for those between 55 and 60 years old.

“Such high reliance on the public sector makes the economy vulnerable to local and external economic shocks. That is, if the fiscus is unable to collect enough revenue, the government will be forced to institute harsher austerity measures, which include reducing public servants’ salaries and mass lay-offs,” he says.

The economist’s sentiments concur with those of the IMF, saying Namibia’s public sector wage bill, accounting for about 40% of public expenditure, is one of the highest among Southern African Customs Union countries.

“Moreover, public wages in Namibia carry a high premium compared to the private sector, which discourages entrepreneurship. While the wage bill control measures applied in recent years have likely contributed to reducing the premium, the resulting erosion of public sector wages is not sustainable as it risks undermining the quality of public services,” the IMF has said.

The fund wants the government to review its civil service.

“To prepare the ground for the reform, a functional review of the civil service needs to be completed and an incentive compatible programme of early retirement adopted,” it has said.