20 December 2012

Namibia: Govt Scrambles to Cover Hikes

GOVERNMENT is digging into the Contingency Fund and Public Service Medical Aid Scheme (PSEMAS) surplus to cover the public servants' salary increases and service benefit improvements.

The public service increases that were agreed by the government and unions representing civil servants and teachers last month will add an additional expenditure of close to N$1,2 billion for the 2012/13 financial year to the government wage bill.

There is a shortfall of close to N$320 million, and the secretary to Cabinet, Frans Kapofi, yesterday confirmed that the government is "mobilising resources" to honour its agreement on public servants' salary packages.

"The issue of salaries was brought into negotiations midstream. It was not really on the agenda and its inclusion is causing some difficulties for the government. We were never prepared for an annual increment," Kapofi said.

He said, however, that the government is committed to meet its obligations.

The public service payroll was N$13,2 billion for the current financial year. Additionally, the salary increments and service benefit improvements for the 2013/14 and 2014/15 financial years will be over N$3 billion and N$4,3 billion respectively.

If President Hifikepunye Pohamba approves the recommendations of the Public Office Bearers Remuneration and Benefits Commission that the salary packages of political office bearers should increase from N$22,9 million to N$68,7 million, the total public wage bill would be in the region of N$15 billion per year.

Finance Minister Saara Kuugongelwa-Amadhila had earlier said that the public sector wage bill had grown from 10 percent of the Gross Domestic Product (GDP) in 2008/09 to 14 percent in 2012/13.

The public sector wage bill now amounts to 45,2 percent of Government's total revenue; four years ago it represented 33 percent of Government's revenue.

The country's total budget for the the 2012-2013 financial year was N$40 billion with almost half of it going on salaries leaving little for other developmental challenges and capital projects.

To cover the public servants' salary increases and benefit improvements, ministries and regional councils are to fund their additional expenditure from their savings, and those that do not have any savings will be partly funded from the Contingency Fund and the PSEMAS.

A proposal was made that N$80 million be sourced from the N$118 million left in the contingency fund budget.

From the PSEMAS, which currently has a balance of N$570 million, more than N$239 million is to be sourced, leaving an amount of N$340 million in the PSEMAS kitty for medical claims for December through to March next year.

The remaining expenditure of the agreement reached between Government and the two bargaining trade unions, the Namibia Public Workers' Union (Napwu) and the Namibia National Teachers' Union (Nantu) on November 8, will be worked into the budgets of the next financial years.

For the 2013/14 financial year, it is estimated that the additional public salary increments and service benefits will cost over N$3 billion; for the 2014/14 financial year, it will additionally cost more than N$4 billion.

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