Rédaction Africa Links 24 with pierre Dieme
Published on 2024-04-11 14:42:55
Recently, software engineer Arona Oumar Kane produced an interesting article titled: The Salary Bomb. In summary, he argues that salary increases for public sector employees are morally unacceptable and economically unfounded, and that the new regime will struggle to manage these salary increases.
In my humble opinion, the salary bill is far from being a bomb, judging by the magnitude of the increases, the nature of the raises, and the parallel evolution of the debt, which should concern us more than the salaries.
### On the Extent of Salary Increases
First of all, it should be noted that not all personnel expenses are received by employees every month. In this category, in addition to salaries, bonuses, and allowances, there are social security contributions, medical coverage, payments to non-Senegalese personnel in diplomatic missions, and other personnel expenses.
It is true that between 2022 and 2023, personnel expenses increased by 23%, while internal revenues only grew by 13%. However, the “personnel expenses/internal revenues” ratio remained relatively stable between 2021 and 2024, dropping from 33% in 2021 to 30% in 2022 before rising to 35% in 2023 and then returning to 33% in 2024.
It is also worth noting that between 2021 and 2022, internal revenues increased by 15% while personnel expenses only increased by 5%. The same trend is expected in 2024, with internal revenues projected to increase by 20% while personnel expenses will only grow by 13%. Once again, not all of these personnel expenses go directly to state agents.
Several studies in recent years have shown that the average salary in Senegal ranges from 100,000 to 150,000 CFA francs per month, which is abnormally low for a country where the cost of living is one of the highest in the sub-region.
### On the Nature of Salary Increases
Additionally, some increases in personnel expenses are related to the regularization of sums owed for several years (such as teacher advancements or agreements with various sector unions). While there have been numerous recruitments and salary revaluations, they are within acceptable proportions for a country where thousands of young graduates emerge from schools and universities each year, with a private sector that struggles to absorb them. As the primary investor in a developing country like Senegal, the state can also be the largest employer until the private sector becomes strong enough to absorb a significant portion of this workforce.
Despite these extraordinary increases, an average administrative agent is expected to receive 670,000 CFA francs per month, gross (totaling 1,442 billion for 179,000 agents) in 2024. This amount is not entirely received by the employee as taxes are deducted at the source, and this average includes other support payments and contracts for non-permanent agents that the state remunerates for specific tasks. If all these elements were deducted from the global amount, the resulting salary would reflect the actual remuneration in the public sector in Senegal.
Even if these aspects were ignored in the calculation, the amount is not excessively high, especially considering that the average size of a Senegalese household is 9 people. Moreover, there is a concentration of low salaries in the administration contrasting with some very high salaries that concern a minority elite in terms of proportion within the total number of public sector agents.
### The Debt, the Real Inflammable Product
It is important to clarify that salaries are not paid with debt. These two variables take directions as divergent as those of Pastef and the APR (political parties).
Debt is essential for investments, but one can be concerned about the 36% increase in debt interests between 2023 and 2024. The debt service (principal + interests) will increase by 44% over the next two years, reaching 2,600 billion in 2026.
Currently, I do not believe that the salary bill can be a burden for the new regime. In fact, I believe it should be increased by recruiting more qualified youth in the public service and motivating existing employees with the condition of performance related to the modernization, efficiency, and productivity of the administration.
The real challenge lies in rationalizing other operating expenses, prudent debt management, broadening the tax base, and more rigorous management of tax exemptions. The debt/GDP ratio is already around 80%, but simply changing the base year for GDP calculation could lower it, reducing the relevance of this solvency ratio. However, urgent improvement is needed in liquidity ratios in the short term by working on revitalizing exports and increasing budget revenues. Given the high concentration of tax or treasury inspectors in key government offices, this should not be difficult.
Overall, the article raises important points about the salary situation and debt management in the public sector in Senegal, highlighting the need for a balanced approach to ensure financial stability and optimal resource allocation.
Read the original article(French) on Dakar Matin
