Between 2010 to 2016, Data suggests, on average Private and Public sectors Wage bill has been increasing by 32.9 percent and 26.3 percent respectively. Consecutively, the share of private sector wage bill to the country’s Total wage bill in the period under study is 56.8 percent, slightly 12 percent above Public sector wage bill (44.9 percent).
What does this increase in Private sector Wage bill really means? One needs to understand what constitutes a Private sector wage bill.
Wage bill is a factor of number of employees, wage rates, other employment benefits and costs e.g. NSFF, SDL, WCF etc. We to compute the share of these factors to Private sector wage bill in order to see what factors is driving the wage bill upwards as a percentage of Gross Domestic Product (GDP)
Conducting a Wage Bill analysis can be used to understand how employers can be incentivized to employ more in order to achieve national intended employment targets, 8 millions by 2025 (as per 2020-2025 CCM manifesto) among many national objectives.
In the analysis of the distribution of employees by sector and wage rates, data shows employment by private sector has been increasing in the Up to 500,000 wage bracket (approximately 846,420 employees) and less in the between 500,001 to 1,500,000 ( 162,152 employees) and above 1,500,000 (31,612 employees) wage brackets.
One can argue that, persistent increase in employment in the Up to 500,000 bracket is a way to embrace the increase in the wage bill as driven by factors other than number of employees.
ATE as a representative of employers will continue to advocate for further reduction of wage bill including reduction in the SDL, review of eligible NSSF pensionable emoluments, WCF, pay roll taxes etc.
Source: NBS, Employment and earnings Report (2016).
Note. Computation is by the author
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