Putting demand for higher salaries in context: Will government get it right?

The President Clinton campaign team of 1992 called it “Economy Stupid” meaning the bad state of the economy should be obvious to everybody.
The current plight of Uganda’s economy where growth in production across all sectors has fallen below the required levels should be obvious to all.

The resulting general increase in prices has undermined real incomes – purchasing power of money – call it salaries. A failure to increase salaries has undermined staff welfare and dedication to work. Even the cases of absenteeism could be a result of people seeking alternative sources of income to top up inadequate salaries. A teacher may stay home and dig.

The demand for salary increase should not just be pegged on the quest to match the already enhanced salaries, but treated as an urgent requirement in its own right. For example, in Kenya the Salary Commission recommended reduction of some salaries, including that of the president and Members of Parliament.
In Uganda, that will be a true test of whether government is ready to tackle the elephant in the room by tearing the walls apart. The truth is that government can neither afford to enhance salaries of everybody to very high levels nor retain such huge salary disparities.

It is my opinion that the proposed provision of cars and security to the judicial officers, building teachers’ residences at primary schools to curb absenteeism, and ‘policing’ presence in schools and hospitals through clocking systems is actually missing the underlying cause. I once met a Resident District Commissioner who sent away his body guards because he had to feed them from his own dwindling income! Every government employee needs a salary increase and not necessarily better facilitation, which is another concern.

Welfare economics makes it clear that giving people actual increases in income is better than substituting such increase with material facilitation. Cash provides one with a wider choice of spending in terms of both what to spend on and when.

Having a government vehicle with little salary offers less welfare improvement to a person whose immediate problem is paying rent, treating a sick child or paying school fees.
Given the current budget constraint, increases in salary will require government to generate new money (quite a difficult task in a stressed economy) or restructure its entities and reallocate the savings.

Quite often government has only reallocated funds from some sectors without reallocating or deleting the functions that are no longer funded. Restructuring would imply deleting all the non-funded entities/activities, which by default will no longer be priorities. For example, government can sell about 75 per cent of its vehicles – leaving only those for staff at the level of director and above as well as pool vehicles.

The savings, which might be zero as government will only be reducing its deficit, would then be used to enhance salaries and let officers make own travel arrangements. The other sources of funds include dissolving of several government agencies (as already directed by the President) and winding up ineffective projects, and curbing corruption.

Finally, government will have to reduce its work force to a better facilitated and effective team.
An increase in government salaries will prompt the private sector to make a corresponding response since public servants, even with their bad plight, are generally the best paid employees in the country.

Much as there are pockets of well-paid people in both the private and public sector, the overall salary situation in the country needs urgent attention. If no one can find a reason, let us agree that it is a good stimulus for the struggling economy.

Dr Muhumuza is a development policy analyst committed to inclusive growth.
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