Provincial government provides a wide range of essential services, from education and health to infrastructure development. Recent data show how much money provincial government spends, in particular on compensation of employees.

Government expenditure can be classified in functional and economic terms. The functional view reflects the purpose for which transactions are undertaken, mainly in terms of the services that government provides. In the case of provincial government, spending is dominated by education and health. Together, these two functions account for R561 billion (or 76%) of provincial government expenditure, according to the latest Financial statistics of provincial government statistical release (Figure 1).

In economic terms, expenditure is classified according to the nature of the transactions involved. Compensation of employees and purchases of goods & services are line items that come to mind. In the 2023/2024 financial year, provincial government expenses amounted to R704 billion.¹ Compensation of employees was the main cost driver, accounting for almost two-thirds of the total (Figure 2).

If we explore the expenditure data by province, the Eastern Cape provincial government recorded the highest percentage of compensation of employees to total expenses, followed by Limpopo and Free State (Figure 3). Western Cape and Northern Cape registered the lowest contributions.

Figure 4 shows the amount spent on compensation of employees (R451 billion) by function. Over half was paid to civil servants working in education, followed by those in health (Figure 4).

As mentioned above, education and health are the two leading responsibilities of provincial government. These two mammoth tasks require a large number of teachers, education personnel, nurses, doctors and health care workers.

A time series provides insight into how much the provincial government wage bill has grown over the last decade. In 2014/2015, compensation of employees amounted to R271 billion, rising to R451 billion in 2023/2024. This equates to an annual growth rate of 5,8%, lower than the annual growth rate of 7,4% for purchases of goods & services (R98 billion to R186 billion). The annual increase for total expenses was also 5,8% (R423 billion to R704 billion).

Figure 5 shows the minimal change in the contribution of compensation of employees to total expenses over this period, which remained within a tight range of 63,9% to 64,5%.

For more information, download the latest Financial statistics of provincial government statistical release here.

¹ Excludes capital expenditure.

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