Curb wages to cut costs, says Treasury
JOHANNESBURG – The government plans to convince organised labour to join efforts to cut the public wage bill in a bid to narrow the deficit by R150 billion over the next three years, the National Treasury said yesterday.
The Treasury said the government had to talk to organised labour on steps to curb salaries in order to cut its expenditure bill.
It said progress on the talks would be announced in the 2020 Budget.
“Options to be considered include pegging the cost-of-living adjustments at or below CPI inflation, halting automatic pay progression and reviewing occupation-specific dispensations for wages,” it said.
Finance Minister Tito Mboweni said the public sector wage bill had shot up dramatically and for every R100 received in taxes, R46 was allocated to compensating public sector employees.
“It is clear we need to have a conversation on compensation with public sector workers on how in these difficult circumstances we can moderate the wage bill,” Mboweni said.
“I am not saying it is equal to cutting the number of employees. It is the size of the wage bill that needs to be addressed.”
The Treasury said between 2006/07 and 2018/19, the public service wage bill more than tripled to R518bn on above-inflation increases.
It conceded that the expected savings announced in February had been reversed.
“Compensation measures, which include early retirement without penalties, were anticipated to generate savings of R12bn a year in 2020/21 and 2021/22. These measures will be included in a broader discussion between the government and labour on future adjustments to wage bill growth,” it said.
Director-general Dondo Mogajane said only 3 350 individuals had taken up the offer for early retirement.
“Compensation is one of the largest components of public spending and, since 2006/07, has grown faster than any category, except payments for financial assets,” he said.
“This trend has become a source of spending pressure across government, squeezing out spending on other inputs and capital equipment.”
Mboweni said 29 000 public servants, Cabinet ministers, members of Parliament and provincial executives earned more than R1 million last year.
“After adjusting for inflation, this is more than double the number of civil servants earning more than R1m in 2006/07. The average wage increase across the government was 6.8 percent in 2018/19, or 2.2 percent above inflation.
"After adjusting for inflation, the average government wage has risen by 66 percent in the last 10 years,” Mboweni said.
The average wage increase across the government was 6.8 percent in 2018/19, or 2.2 percent above inflation. After adjusting for inflation, the average government wage has risen by 66 percent in the last 10 years, said the Treasury.
Average remuneration in the public sector was higher than average remuneration in the rest of the economy, the Treasury said, citing data from Statistics SA's Quarterly Employment Survey, which showed that average remuneration across 110 non-agricultural sectors and sub-sectors in 2018/19 was just under R273 000, compared with an estimated average remuneration of R352 000 for employees of national and provincial government.