Cees Bruggemans, Chief Economist FNB
27 August 2010
Regarding the public sector strike currently fully underway, a few
inconvenient truths may perhaps have escaped the general notice.
I am being nearly daily asked about the impact of this strike. After
thinking about it carefully, I would like to share with my readers the
following.
The main impact for the electorate is one of disruptive inconvenience,
to the point of heartache (one thinks of the terminally ill in
hospitals and nail-biting matriculants, but reality goes well beyond
them alone).
But beyond such tragedies the picture changes rather drastically, even
if some imagination is required.
For GDP growth purposes, the statistical authorities worldwide have
long ago given up trying to measure the work productivity and changes
therein of public sector workers.
They therefore merely take into account the actual number of civil
servants employed and being paid a salary. What these servants may be
up to isn‚t taken into account.
So whether they work or strike, it doesn‚t make the least difference
to GDP or its growth. After all, it is all paid for, by you the
taxpayer and electorate. A sunk cost, so to speak, so why worry
measuring anything?
Nice to know, where trivia is concerned, not so?
But it gets better. For the rest of us get enormously inconvenienced
by the disrupted public services. Not a few of us will have made
futile journeys trying to get something done in vain as a direct
consequence of this strike. Or we succeed in getting something done,
but by proactively seeking alternatives compared to depending on some
servant.
In the process we may be using our cars, consuming petrol, trying to
get a service done by a private entity.
How much more private schooling, private hospital care, private
security, getting more people to help out socially, stocking up on
water, making that decision to go solar, too many instances to think
of and mention here, but prompted by absentee servants.
In all these instances we would be engaged in ADDITIONAL economic
activity. This stuff wouldn‚t be happening if it wasn‚t for the public
sector strike.
All of which leads to the strangest kinds of sensations.
For this strike could well be ADDING to GDP growth at present rather
than deducting from it.
It would also be adding to the tax revenue stream, presumably just
what the country needs in this dire hour of budgetary need.
Imagine government advisors suggesting that the public sector should
strike more, and if possible for longer, indeed go on permanent
holiday, for consider the extra GDP growth the country could be
enjoying, the extra work that would be created by desperate taxpayers
and voters trying to keep their lives together, and the additional tax
revenue the government could be collecting this way.
Indeed, what‚s striking is that no other country has tried this
formula for more job creation and tax collection more fully before.
They say always something new out of Africa. This time we could really
surprise the world if we tried hard enough. But I suppose that‚s our
real Achilles heel.
We never really seem to try hard enough.
Cees Bruggemans is Chief Economist of First National Bank. Register
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www.fnb.co.za/economics