There must be something cathartic about repackaging an old guard as constituting a new dawn. A new dawn implies a new awakening, shedding old ways and reimagining your path – or even changing course entirely. Perhaps this explains why the euphoria of the promise of a new dawn died as quickly as it arose because cold, hard reality set in.

For a brief moment, the old architects were rebranded as reformists who would change the country’s economic trajectory. But old habits die hard, or rather, they take over in the absence of new ideas. Take, for example, the talk about the state’s wage bill. The intensity has somewhat cooled since 2015 when the belt-tightening conversation was gathering pace. However, between then and now, the conversation around a way forward on how to cut the state’s growing wage bill has been revised and obfuscated so many times that it is hard to tell which way things will go.

This could be ascribed to the fact that election season is in full swing. It could also be that the powers that be are treading carefully around the issue, so as not to cause unnecessary panic among the rank and file. Another possible angle is that this is a sore topic for a key constituency, or it could be that there is silence because there is no plan on the table.

A summary of this topic goes something like this: the state has too much debt and one of its fastest-growing line items is its wage bill. And, therefore, there have been proposals to address this through a number of schemes, including instituting wholesale retrenchments. But this is where things get a bit murky: wielding the axe indiscriminately might be a counterintuitive measure that could cause more harm than good.

Here’s why. South Africa’s economic problems are nothing new: history is awash with examples of emerging-market economies having embarked on massive overhauls of their civil services because of fiscal pressures, with varying degrees of success and failure.

In the early 1990s, the World Bank held a series of conferences at which it examined the efficacy of such programmes in Latin America, Africa and Eastern Europe. This was against the backdrop of a floundering global economy, which was characterised by rising interest rates and oil price shocks. Added to this, were stock-market crashes and wide-spread economic contagion manifesting in zero to no growth. In short, the global economy was facing the same headwinds it is facing now: low growth, uncertainty and general volatility.

By all accounts, this was a depressing episode for the world economy. And all that panic, as well as recent democratisation at the time, precipitated most of the austerity programmes undertaken by countries in Latin America, Africa and Eastern Europe. This wave, or phenomenon, struck mostly in the developing world, while the developed economies were able to absorb the shocks – or so the historical record shows. This, in part, explains why the World Bank focused on the global south when studying civil service reform programmes.

The World Bank synthesised the conference proceedings into a 360-page technical paper, capturing the experiences of civil service reform programmes from Argentina, Venezuela and Chile to Ghana and Uganda. In the latter part of the 1990s, John Haltiwanger and Manisha Singh also examined the effects of civil reform programmes in a paper titled Cross Country Evidence on Public Sector Retrenchment.

Some of the idiosyncrasies that Haltiwanger and Singh noticed upon assessing data from these programmes was that, in some instances, civil service reforms ended up costing more than had been initially anticipated. In other words, the benefits of cutting the state wage bill were often overstated until the final numbers were rung in. In addition, rehiring was often overlooked, as well as how long it would take to realise the financial benefits accrued as a result of such programmes, if any arose at all. Furthermore, there does not appear to be a correlation between trimming the civil service and increased productivity.

For some states, the upfront costs of mass retrenchments outstripped the modest savings realised in window periods ranging from 18 months to two years. The one benefit accrued to African states that instituted such programmes, however, was that they cleaned up their payrolls and got rid of ghost workers.

The historical experience also suggests that going on a mass retrenchment drive amid low growth and high unemployment may gut the state’s technical expertise and create a new class of unemployable people. In short, the literature shows that highly skilled public service workers tend to be readily snapped up by the private sector at higher wages, while the not-so-highly skilled workers in the public service often land up in long-term unemployment and, in some cases, end up relying on state assistance. The latter constitutes a hidden cost that is not factored in when considering these programmes.

There are a whole host of other variables, scenarios, political factors, culture, environment and historical context, which are overlooked when carrying these reforms. But these end up defeating the purpose of these programmes or undoing whatever moderate financial savings are achieved by the reform.

It is an old problem being treated with old medicine – or at least the proposed solution is hackneyed. Going the retrenchment route when single-digit growth is the norm could end up costing the state more in the long run than initially projected. There is nothing wrong with a government being mindful about its spending. But it must think long and hard about what good, if any, will come of it hollowing out its technical expertise and capacity to implement its programmes. DM