GOVERNMENT is caught between a rock and a hard place with its capsizing wage bill.
Analyst are of the opinion that while retirement is elected as the only option to reduce the inflated amount of civil servants, this would cost government N$1.6 billion in pension payouts.
According to recently released report by First Capital Namibia, Namibia’s Fiscal Analysis, March 2019, the Namibian civil service has a staff composition of 91,295 employees as of April 2018, with a moratorium placed on hiring across the public sector.
The report further stated that 6% or 5,478 of the total number of civil servants are aged between 55-59 years. In total, the government spends N$29.3 billion on personnel related expenditures of 91,295 civil servants, which translates to an average N$306,000 cost to government for each civil servant.
Of the 5,478 civil servants aged 55-59 years, any retirement that would attract at least 40% of this group would save government at least N$670.5 million in personnel related expenditure equivalent to 3% of the wage bill.
On the other hand, the same situation would cost the government pension fund N$1.62 billion in pension payouts, the report said.
If government is to implement this measure, it would be able to reduce about 8% of its budget deficit.
“In the long run, this measure, combined with other measures, will place Namibia at a sustainable fiscal position to contain expenditure and reduce debt,” First Capital stated.
Earlier this year, Cabinet secretary, George Simataa, stated that early retirement remains the only option for civil servants, but is not a necessary requirement.
Simataa said that Government has not adopted any retrenchment policy, nor is it embarking on any form of structural re-alignment of any kind that can be considered “retrenchment”.
He further added that the wage bill issue requires rigorous consideration due to its multiple implications to government and the economy, as well as the impact on skills and experience that might be lost.