Salary comparison
  • Private sector earnings tend to push up salaries in the public sector, a new working paper from the South African Reserve Bank suggests.
  • But higher pay in government does not push up private sector remuneration, analysis shows.
  • Three of the five sectors that saw the fastest average growth in salaries fall in the government sector – but if you wanted the biggest salary growth in recent years, its mining you should have been in.
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Anyone who wants to hold back wage growth – say a central bank that has the job of managing inflation – should not forget the private sector, a new working paper published by the SA Reserve Bank on Tuesday finds.

The large, and growing, total government wage bill has been declared a fiscal risk for South Africa.

But statistical analysis suggests that it is growth in pay in the private sector that drives salary increases in the public sector, while government increases do not seem to push up pay in the private sector in turn, according to the working paper "Aggregate and sectoral public-private remuneration patterns in South Africa".

"In a nutshell these results confirm that individual public sector earnings have no explanatory power for aggregate private sector earnings while aggregate private sector earnings have a significant long run relationship with individual public sector earnings with the exception of local authorities," writes authors Andreas Wörgötter and Sihle Nomdebevana.

The paper analysed remuneration patterns between the beginning of 2001 and 2017 to consider the relationship between public sector and private sector jobs.  

Along the way it also looks at the average earnings in different sectors in a quarter-by-quarter basis – and finds that although several government sectors saw above-average growth in pay, the mining sector saw the fastest growth in remuneration.

Salary growth

On average, people who worked for local authorities and in public transport saw their earnings grow at a below-average rate. So did those in private transport, in trade and accommodation, and financial intermediaries.

Above-average pay growth was recorded for those who work for provinces and in public sector enterprises broadly. The deeply troubled construction sector also saw faster than average growth in pay – but not as fast as those who work for national government departments. Even that, though, was easily outstripped by average pay increases in the mining sector.

Both construction and mining earnings saw extraordinary growth after 2009, the study’s authors note.

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