Statistics South Africa has published new data on government spending, and the key sectors where taxpayer money is used.
The data shows that the South African general government spent R1.79 trillion in 2018/19, according to the latest Financial statistics of consolidated general government statistical release.
This roughly translates to about R31 000 per person that year, if we consider South Africa’s population of 57.9 million people.
‘General government’ includes all national and provincial government departments, municipalities, extra-budgetary accounts and funds, and higher education institutions.
When looking at the spend as a R100 total, the biggest expenses are as follows:
- R24 on general public services – including R10 on debt payments and R11 on executive and legislative services;
- R20 on education – including R6 on primary school and R5 on universities and other tertiary schooling;
- R14 on social protection – including R4 on grants and other spending for the elderly, and R4 for families and children;
- R12 on health – including R7 on hospital spending;
- R10 on economic affairs – including R4 on roads;
- R10 on public order – including R6 on policing and R1 on prisons;
- R10 on miscellaneous and other expenses – including R4 on housing.
StatsSA said that its data expresses government spending in functional terms, so spending on wages and salaries occurs across all the ‘bubbles’.
“To get an idea of employment costs, we need to rearrange the data into categories that express spending in economic terms,” it said.
“These categories are purchases of goods and services, subsidies, grants paid, interest, social benefits and compensation of employees.”
Compensation of employees accounted for R694 billion, or 41.9% of total government expenses in 2018/19. This was followed by purchases of goods and services (21.3%) and social benefits (13.6%). Other items accounted for the remaining 23.2%.
The financial statistics of consolidated general government statistical release debuted in 2006 with data for 2004/05. That financial year, compensation of employees accounted for 39.2% of total expenses, rising to a peak of 42.4% in 2010/11 and moderating slightly to the 41.9% recorded in 2018/19.
“The rise in compensation of employees over this period has outstripped inflation,” StatsSA said.
“General government spent R170 billion on salaries and wages in 2004/05. This increased to R694 billion in 2018/19, representing an average annual growth rate of 10.5% per year. The consumer price index, in contrast, increased by an average of 5.8% per year over this period.”
National Treasury has identified two drivers behind the rise in compensation spending: an increase in the number of personnel numbers and a rise in remuneration.
The rise in remuneration, which has had the most impact, was driven by three main factors: the introduction of occupation-specific dispensations, such as once-off salary increases for skilled staff, near the end of the 2000s, the addition of annual cost-of-living adjustments to basic pay, and wage progression within ranks.
The introduction of occupation-specific dispensations in particular seems to show up in the data, StatsSA said.
“A time series from the Financial statistics of consolidated general government statistical release shows notable annual increases in compensation of employees from 2007/08 to 2011/12, increasing on average by 14.5% per year over this period. The average annual increase for the next five years (2012/13 to 2016/17) was lower at 8.8%.”
“Health and education accounted for over half of the compensation budget in 2018/19. This was mostly to finance the vital roles that doctors, nurses and teachers perform for a growing population.
“Public order and safety – which includes personnel working in the police, correctional services and the courts – accounted for almost 20% of total compensation of employees.”