AP

Top economists are warning that Finance Minister Pravin Gordhan needs to curtail the growing cost of South Africa’s 1.3 million public servants, with the salary bill now topping 40 percent of spending, even excluding the lucrative packages paid to top executives of state-owned enterprises.

Noting that many public servants were unsuited for their jobs, these economists advised Gordhan yesterday to take steps in his Budget to professionalise and de-politicise the “key technocratic layer” of the public service.

They also said he should radically reform the education system, and rework the industrial policy to take advantage of the economic clout of sub-Saharan Africa.

Arthur Kamp, a Sanlam Investment Management economist, said the government had “probably been borrowing” to pay public servants’ salaries.

If this continued to unsustainable levels, there was a risk of slipping into a debt trap.

Iraj Abedian, an economist who is a special adviser to the minister of mineral resources, said the number of public servants relative to the number of employed South Africans had dropped during the era of former president Thabo Mbeki.

Their yearly increases had also not kept up with inflation.

However, there had been a rapid turnaround in the fortunes of public servants since the Jacob Zuma faction took control of government in 2008, but there was a need to keep a close eye on salary spending, which would inevitably constrain other spending items in the budget, including health and education.

Addressing the Cape Town Press Club on Tuesday, Abedian said policymakers should not only focus on fiscal deficits, but should also look at human and infrastructural deficits. High administered prices “particularly the surge in electricity prices” reduced South Africa’s competitiveness.

He believed if South Africa could get its policy mix right, end political deployments to key delivery posts and unscramble an industrial policy to take advantage of the southern African regional economy, it could be headed towards another golden age.

Abedian noted that the World Economic Forum’s competitiveness report now placed an inefficient government bureaucracy and an inadequately educated workforce at the top of obstacles in the way of progress in South Africa – above the concern about crime and theft which had been the foremost obstacle previously.

Gordhan’s 2012/12 Budget could be regarded as a success if it balanced financial criteria (such as the ratios of the deficit and debt to gross domestic product) with economic criteria (such as the state of infrastructure needed for sustainable growth) and effectiveness criteria (finding skills to grow the economy).