Chapter 10 Personnel Personnel overview Personnel management is

Chapter 10 Personnel

Personnel overview • Personnel management is critical to improving service delivery at all levels of Government • At provincial level… – Good progress in establishing a framework for personnel management – Personnel costs are being managed • At local government level… – Management framework still weak – Personnel costs still crowding out spending on goods and services and capex

Provincial personnel trends • Real decline in personnel costs from 1996/97 to 2001/02 • Decline in personnel numbers over the same period • Moderate increase in unit labour costs over the period • Moderate real growth in personnel spending going forward aimed at: – Increasing employment in health – Provision for pay progression and performance-related pay

Provincial personnel policy issues • Poor provinces still spending a lot on surplus staff – Resulting in lower capex and poor staffing in education and health • Need to increase employment in health and welfare services – Especially medical professionals, social workers – Revised pay system required • Need appropriate performance-related pay systems • Need to decentralise personnel management lower down the chain – Giving hospital managers real powers – Increasing powers of school governing boards

Municipal personnel trends • Local government employs 210 000 people – 50% are found in the 6 metropolitan councils – 7% are employed by district councils – 43% are employed by local municipalities • 30% of staff are found in trading services such as electricity, water, sewerage and sanitation and refuse collection • Remainder are employed in parks, culture and recreation, emergency services, transport, corporate services and planning • Personnel costs rising as percentage of operating budgets • Generally, municipalities have higher unit labour costs than provinces

Trends in employment costs • Personnel costs have risen significantly both in real terms and as a percentage of total spending – Personnel costs are 30% of expenditure – This percentage is higher if bulk purchases and intra-municipal transfers are excluded • Two main factors driving personnel costs – Amalgamation of smaller municipalities into larger ones and the resultant pressure to equalise salaries – Generous leave pay-outs, retirement provisions and medical aid benefits - account for up to 40% of personnel costs • Pre-1994 agreements mainly responsible for extremely generous benefits • Senior management costs in metros generally high

Municipal personnel policy issues • Rising personnel costs – Costs of merging previously separate municipalities with different pay systems and scales • High cost structure of employee benefits – Employer contributions for medical aid and pension are high in relation to provinces, private sector – Contingent liability with respect to accrued leave – SALGA is proposing norms to bring benefits in line with national and provincial government

Municipal personnel policy issues • Need to increase skill level of staff in smaller municipalities • Need to factor in personnel implications of: – – Creating municipal entities Electricity distribution industry restructuring Water industry restructuring Changes in powers and functions of district and primary municipalities