Madam Deputy Speaker, one in eight people in South Africa work in the public sector, with salaries 44% higher than those of their counterparts in the private sector, apparently a public sector that has grown substantially as great efforts have been made to attract skills in order to deliver much needed services.
In order to attract and keep capable people in the public sector, private sector salaries must be matched and this does impact on state-owned enterprises and state department budgets. Executives in parastatals and state-owned enterprises do earn competitively and at times outrageous packages.
The New Growth Path proposals, published early last year, call for a cap on executive pay above R700 000 per annum, plus a limit on salary increases in line with current inflation rates for all staff above basic and semi- skilled levels. Recent salary survey data confirms, however, that many senior executives in both the private and public sectors already earn in excess of this amount, making the proposals impractical.
As to how much of the rise in compensation of executives is a natural result of competition for scarce business talent, and how much is the work of manipulation and self-dealing by management unrelated to supply, demand, or reward for performance is debatable. Again, this applies as much in the public sector as in the private sector.
Absurdly, getting fired often involves huge payouts even for those whose terms of office have been marked by financial misconduct, violation of tender processes, fraud, improper behaviour, gross negligence or just plain failure.
Recently, the Minister for the Public Service and Administration warned that salary increases for public servants higher than the rate of inflation, 6,4%, are not sustainable - also relevant in the private sector - although jobs in the private sector are generally only created and maintained if the cost of the job is linked to the value created by the individual performing the job.
Public sector jobs on the other hand absorb wealth created in the private sector and a critical role of government is to ensure that the tax burden on the private sector is reasonable and does not jeopardise productivity.
The ACDP recognises that in South Africa there is enormous frustration among sections of our population at the high-income inequalities in South Africa. We have no future if it is not a shared future and change must come. Hopefully, this change will be voluntary change and not revolutionary change! Thank you.