Mozambique: Single salaryscale ‘aggravating’ public sector funding shortfall

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Mozambique: Single salaryscale ‘aggravating’ public sector funding shortfall

12:03 CAT | 13 Sep 2024

FILE - For illustration purposes only. [File photo: Lusa]

Mozambique’s government has acknowledged that the introduction of a single salary scale for public sector employees has “aggravated” the state’s limited capacity to invest in priority areas, estimating an overrun of more than €300 million in two years.

“A significant portion of the resources generated by the economy is being absorbed by expenditure on wages and salaries,” reads a report from the Ministry of Economy and Finance on fiscal risks for 2025, consulted on Friday by Lusa, that highlights the impact of the Single Salary Table (TSU) approved in 2022.

“This situation has worsened with the start of the implementation of the TSU, limiting the government’s ability to invest in priority areas,” states the report, also issuing a warning: “With the wage bill representing, on average, 14.5% of GDP [gross domestic product] between 2021 and 2023 and an average deviation [ overrun] of 21.3 billion meticais [301.1 million euros] in relation to the initial appropriations planned, the management of the wage bill has been a major concern for public managers, so there is a need to find mechanisms for its sustainability.”

It adds that for 2025 the “pessimistic scenario foresees an estimated additional expenditure of 31 billion meticais “[438 million euros]”, which is “explained by the sensitivity of the wage bill to the slower growth of nominal GDP.

“The medium-term outlook for the wage bill as a proportion of GDP suggests a slower reduction in the pessimistic scenario (13.6% on average) compared to the baseline scenario (12.3% on average), with a converging trend in 2027,” it continues.

The application of the TSU has been strongly contested by various professional classes, such as doctors and teachers, and has brought salary delays and cuts, including in the security forces.

Approved in 2022 to eliminate previous asymmetries and keep the public sector wage bill under control, the implementation of the TSU has caused salaries to soar by around 36%, from 11.6 billion meticais per month (€169 million) to 15.8 billion meticais (€231 million), according to previous official figures.

Lusa reported in August that the Mozambican state’s spending on salaries and wages in the civil service in the first half of 2024 was up 10.2% year on year, to almost 102.705 billion meticais (€1.436 billion).

READ: Mozambique: Implementation of the TSU “was more costly than expected” – IMF

According to the budget execution report for January to June, this is already 53.9% of the estimated figure for the whole of 2024 – 190.676 billion (€2.666 billion), compared to 89.282 billion meticais (€1.248 billion) in the first half of 2023.

The country’s president, Filipe Nyusi, told parliament on 7 August that the implementation of the TSU had reduced wage discrepancies, solving a decades-old problem in the public sector.

“The reform of the salary policy in the public administration, reflected in the law on the single salary scale, was designed to resolve manifest discrepancies in salaries between state employees and agents with the same qualifications… a situation that has characterised our public administration for decades,” he declared.

At issue is the crisis that has taken hold in the public sector as a result of strikes and threats of strike action by employees, who are demanding better working conditions and protesting against delays and salary cuts that began with the TSU’s implementation.

While admitting that the TSU generated what he called “noise” Nyusi considered that the new scale created “wage balance”, also highlighting the increase in the minimum wage.

“The minimum wage for the civil service has doubled, there has been an even greater [wage] increase in the defence and security forces and the wage gap between the various levels has narrowed substantially,” he stressed.

The president also pointed out that the new scale cut some allowances that weighed heavily on the wage bill: “Salaries had a strong component based on non-pensionable allowances. Every director, minister or president [of public institutions] had extraordinary payments and there were many extraordinary payments.

“Now, most of these allowances have been incorporated into the basic salary,” he stressed.

Source: Lusa