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Friday, 7 February 2014

Wrong Priorities

I spent much of last year bemoaning the poor policy decision to award large public sector pay rise. These graphs below illustrates the scale of that mind boggling wage rise:.

Photo: It is economic folly to spend 11% of your GDP on public sector wages. It is a complete misallocation of resources. Especially when that is being funded by removal of subsidies on fuel, maize and foreign debt. What is wrong with us as a people?
Photo: More economic folly. We are trying to top the wrong tables. In this graphic we are spending more on wages as a proportion of revenues than our peer countries. Where are we going as a people?

It is economic folly to spend 11% of your GDP on public sector wages. It is a complete misallocation of resources. Especially when that is being funded by removal of subsidies on fuel, maize and foreign debt.  We are trying to top the wrong tables. In this graphic we are spending more on wages as a proportion of revenues than our peer countries. 

The situation of course is likely to get worse before it gets bigger because the overall size of the public sector is getting larger as we add more districts, more schools and more hospitals. The problem is that revenues are not increasing because we get inadequate revenues from mining companies and of course the tax base is not broad enough. In short we shall see more borrowing continuing mainly because of poor decisions around recurrent expenditures. 

1 comment:

  1. It may be useful to give a world wide flavour and comparison to these tables by introducing other countries from different continents e.g. Chile, Brail, USA, Canada, UK, Germany, Japan etc. What it will show I am not very sure. But if a good mix of developed and developing economies is given perhaps it will show something.

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