Civil servants left with N$500 pay after deductions
Some civil servants are taking home as little as N$500 a month after loan repayments and other salary deductions are processed through the government payroll system, executive director in the private office of the Prime Minister, Shivute Indongo, has revealed.
Addressing the parliamentary committee on Economy on Friday, Indongo said the situation is a departure from previous safeguards that prevented excessive deductions from employees' salaries.
"The Ministry of Finance had systems in place that prevented deductions exceeding one-third of an employee's salary from being processed," he said.
According to Indongo, the one-third rule was previously enforced through government payroll systems, ensuring employees retained a significant portion of their earnings after deductions.
However, he said the current system no longer appears to provide the same protection.
"We found that virtually any deduction submitted now goes through," Indongo told the committee.
The consequence, he said, is that some civil servants are being left with shockingly low net salaries at the end of the month.
"We have seen cases where staff members are left with a net salary of only N$500 or N$800," he said.
Indongo questioned how workers could survive on such amounts, noting that transport costs alone can exceed the money left in employees' accounts after deductions.
"Imagine earning a salary but taking home only N$500. Transport costs alone can exceed that amount, without even considering household expenses," he said.
He called for urgent intervention to review the deduction system and ensure workers are protected from excessive payroll deductions.
Indongo suggested that Parliament or the Ministry of Finance should consider introducing stricter controls on deductions to ensure employees retain enough income to meet their basic needs.
Deputy Executive Director of the Public Service Commission Secretariat (PSCS) within the Office of the Prime Minister Alfred Tjihambuma reflecting on the deduction codes said that most of the deduction codes that are implemented relate to mandatory deductions, such as tax, pension contributions, social security contributions, and deductions for those who belong to medical aid schemes, as well as other contributions, such as union fees.
“However, we should also be mindful that staff members make their own financial decisions. We live in a democratic society, and individuals may approach commercial banks to obtain loans,”
“In some cases, these loans are granted without the commercial banks or microlenders conducting adequate assessments of whether the borrower will be able to repay them. This can contribute to the high levels of debt that we are discussing. For many microlenders, a deduction code is not required. Individuals simply make arrangements and repay their loans without deductions being processed through the payroll system,” he said.
With regard to whether the Public Service Commission has provided advice, Tjihambuma said nothing has been done at this stage.
“However, the Commission has taken note of the matter through the Office of the Prime Minister. I am confident that something will emerge from these discussions and that appropriate action will be taken going forward,”
Chairperson of the Parliamentary Standing Committee on Economy Iipumbu Shiimi said the deduction codes that people are concerned about are not the statutory deductions, such as tax and similar obligations.
“Those are generally understood. The concern relates to specific financial institutions that have direct access to the salaries of civil servants. This arrangement is largely unique to the public service. In the private sector, a financial institution does not typically have direct access to an employee's salary. Instead, the salary is first deposited into the employee's bank account, after which the lender collects repayments through mechanisms such as stop orders or debit orders. The same applies to insurance premiums and other loan repayments,”
“In the case of public servants, however, some microlenders, including some owned by banks, have been granted direct access to employees' salaries. As a result, a civil servant may be able to obtain multiple loans from these institutions because the lenders have confidence that repayment is guaranteed,” Shiimi said, adding that the Ministry of Finance simply facilitates the deduction and transfers the funds directly to the microlender.
