WINDHOEK - Government can save N$670.5 million annually if 40 percent of civil servants aged between 55 to 59 years were instantly placed on early retirement, an analysis by First Capital Namibia reveals.
In 2017, government announced it was looking at offering early retirement packages to civil servants who wished to retire before the age of 60 as one of the solutions to cut the wage bill.
According to a recent report by First Capital Namibia, civil servants in this age category constitute about six percent – or just 5 478 people – of the total composition of 91 295 civil servants.
The report says government spends N$29.3 billion on personnel-related expenditures of civil servants, which translates to an average N$306 000 cost to government for each civil servant.
Of the 5 478 civil servants aged 55 to 59 years, any retirement that would attract at least 40 percent of this group, the report says, would cost the government pension fund N$1.62 billion in pension payouts.
On the other hand, the report says, the same situation would save government at least N$670.5 million in personnel- related expenditure equivalent to three percent of the wage bill.
The report further says if government is to implement this measure, it would be able to reduce about eight percent of its budget deficit.
On the other hand, saving N$670.5 million would help reduce the government debt by at least four percent, the report says.
“In the long run, this measure, combined with other measures, will place Namibia at a sustainable fiscal position to contain expenditure and reduce debt,“ advised the report.
The report says there is a saying that today’s problems come from yesterday’s solutions, and the fiscal policy challenges and problems government faces today is linked to efforts by government in seeking solutions to solve the unemployment situation, poverty and spending on social and welfare programmes.
“Government can’t now change the past, but if policymakers don’t learn from it, the country will be trapped into recreating it and falling further into debts and end up in debt trap,” it reads.
The 28-page report says the Namibian economy is projected to emerge from recession in 2019 with low GDP growth numbers compared to past growth rates.
The report further says that as the economy starts to register positive real GDP growth rates government revenue is equally expected to gradually increase.
“Revenue improvement that is expected at the back of improved economic activities would be a huge test for our fiscal policy management to maintain the current spending trend of fiscal consolidation.”
Rather than rising expenditure, the report says efficiency should be increased on the current expenditure levels to increase the output with similar resource allocation.
President Hage Geingob, in an exclusive interview with New Era last month, said the ‘elephant in the room’ as far as government expenditure is concerned, was the wage bill.
Geingob hinted at reducing his cabinet next year, if, as widely expected, he is re-elected this year for another term as president.