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The budget guidelines propose a wage freeze for the next three years, among other options, including a new strategy for public sector wages.
Department of the Interior. Image: Sethembiso Zulu / EWN
CAPE TOWN – The government plans to curb salary increases for civil servants.
The budget guidelines propose a wage freeze for the next three years, among other options, including a new strategy for public sector wages.
This is a political hot potato for the government, with the public sector unions already in Labor Court for their decision not to comply with the final year of a multi-year wage agreement.
The Treasury says that salaries for civil servants have grown about 40% over the past decade. The wage bill represents around a third of the consolidated budget.
Treasury documents say the wage setting process “has become divorced from reality” with increases above inflation that do not take into account a weaker economy.
* READ: Tito Mboweni Medium-Term Budget Policy Statement
What is proposed is a public service wage bill that will grow just 1.8% this year and an average of 0.8% over the next three years.
The Treasury says this is essential for fiscal sustainability.
The cuts in the payroll of public servants will account for the bulk of the spending cuts the government plans to implement to reduce its unsustainable debt burden and shift its focus from consumer spending to investment in infrastructure.
The next round of wage negotiations is expected to start soon and the government is formulating its position.
A comprehensive public sector payment strategy is also being developed, which will affect public office holders, state companies, public entities, and local government.
But the Treasury also warns of fiscal risks, including faltering economic growth, litigation by public sector unions over the wage deal and the course of new wage negotiations, as well as state-owned companies and municipalities that don’t have enough money. to cover operating expenses.
‘COMPENSATION OF UNSUSTAINABLE EXPENSES’
South Africa has 1.3 million employees in the national and provincial government who were paid R567 billion in compensation in 2019/20.
Over the past 15 years, spending on compensation for public services has grown at an unsustainable rate that is almost 1.5 percentage points faster than the GDP growth rate.
Treasury documents reveal that 95% of public servants earn more than the bottom 50% of private sector taxpayers and employees
The MTBPS documents cite data from Stats SA suggesting that public sector compensation has grown much faster than wages in the private sector over the past decade.
The rapid increase in wages, coupled with an increase in the workforce, has raised the government’s wage bill by 50% since 2008.
Finance Minister Tito Mboweni said this was untenable.
“Our compatriots in the private sector have made sacrifices and even negotiated pay cuts to keep companies afloat.
“In the last five years, the compensation of public sector employees grew 7.2% annually on average, well above inflation.”
Mboweni said the public service unions and the government were meeting to discuss the best way to resolve the matter.
“The Minister of Administration and Public Service and the leadership of the public service unions are meeting to discuss how best to adapt to the reality that we must do more with less, and that we are all in this together.”
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