Opinionista Xolisa Phillip 11 August 2019

Gutting the public sector will hurt South Africa

At this crucial juncture in its history, the country needs a strong public sector to help steer us out of the troubled waters we’re in.

There is something amiss about the assumption that cutting the state wage bill will magically make South Africa’s problems go away. Pushing that angle is naive at best, and malicious at worst. The concept is not only flawed, but one can argue, successfully, that it is also insensitive.

Months before the Presidential Jobs Summit, which was held in October 2018, there was a pre-event symposium hosted in Midrand and attended by various experts, including economists. The symposium was divided into different sessions, and one session, in particular, stood out. That was a session during which economists presented their solutions to solve South Africa’s joblessness and proposed ways in which to create new employment.

There was a compendium of characters, ranging from the colourful and peculiar to those who piqued the interest of the symposium audience with their out-of-the-box thinking. One economist who made a lasting impression gave a presentation about the folly of insisting on gutting the public sector. He illustrated this point by sketching a picture of the kinds of specialised technical expertise that reside in the public sector.

The key takeaway from the presentation was that, contrary to the popular narrative which is dismissive about the skills levels and competencies of public-sector workers, the public sector houses the majority of SA’s skilled professionals. In other words, the top-line talent in South Africa works in the public sector. Of course, the same argument cannot be made about the calibre of our politicians and who they choose as their support staff, but that is an entirely different topic for discussion in another column.

Looked at another way, consider the fact that the former National Treasury director-general is now the CEO of Standard Bank South Africa, that the erstwhile deputy governor of the Reserve Bank has just landed a plum post at Discovery Bank, and that the ex-home affairs director-general is part of the executive team of Discovery Bank. There are countless others, but those are the ones that immediately spring to mind. Consider also that the former CEO of Absa mostly cut her teeth in meaty roles in the public service first, before hitting the big league in the private sector.

The public sector is a happy hunting ground for talent for the private sector because of the sheer complexity involved in running public institutions and a government, which builds sought-after expertise. The knowledge, know-how and exposure received in the public sector is unmatched. One would also imagine that, because the public sector is a resource-strained environment, a great degree of patience and creative problem-solving skills are demanded of those who work in this space. In short, the public sector grooms talent for the private sector.

Paradoxically, because so much is required of public-sector workers and yet they are given the bare minimum in return, they build up the kind of resilience they would not be able to nurture in the private sector. They also work under intense scrutiny and the ever-present public glare. Those conditions and factors prepare public-sector employees for life in the private sector, or at least the anecdotal accounts from those who have made the transition indicate this is the case. And, in many instances, the transition is seamless.

In their successive reports on South Africa, Moody’s Investors Service, Fitch Ratings and S&P Global Ratings often highlight political noise as a key impediment to the country having an honest assessment about what solutions are required for its myriad problems.

That is true. Look no further than the conversation around the state wage bill and the Reserve Bank’s mandate, and you will find red herring after red herring. This is not only exhausting, it is also distracting and robs us of the opportunity to have a sober conversation about the underlying issues that the country must prioritise and address.

That is so because the conversations range from the downright bizarre to poorly disguised attempts at obfuscation and distraction. Bell Pottinger may have fallen on its sword, but its legacy and blueprint are enduring and live on in South Africa. It is especially hard to separate fact from fiction in the discussion about the state wage bill.

The reason South Africa has been able to hang on to its current sovereign credit ratings is because the ratings agencies still trust those who are entrusted with running our public service. The economic literature also shows that the top-tier talent in the public service usually has no trouble finding lucrative, alternative employment in the private sector.

At this crucial juncture in South Africa’s history, no good will come from depleting the public sector. Now, more than ever, the country needs skilled professionals in the public service, who will help steer the ship away from the troubled waters in which it finds itself. BM

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