Tito Mboweni battles to trim huge public sector wage bill
JOHANNESBURG – The governent is gunning for more than R160 billion of spending cuts in the public sector wage bill and to reduce the head count significantly in the next three years to shore up the fiscus.
Finance Minister Tito Mboweni told Parliament on Wednesday that the wage bill crowded spending on capital projects for growth and items that were critical for service delivery.
Mboweni said that the government aimed to save R37.8bn in the next financial year through this cost-cutting measure.
“Madam Speaker, we cannot go on like this. Classroom sizes are growing, hospitals are getting fuller and our communities are becoming increasingly unsafe,” Mboweni said.
“Once we get wage growth, corruption and wasteful expenditure under control, we will focus our attention on hiring in important areas such as education, police, and health care. We can hire strategically, and better match skills with opportunities.”
The wage bill has ballooned to more than a third of the government’s R1.95 trillion spending, but public sector workers’ unions have voiced opposition to the reduction of the wage bill.
The National Treasury said that it planned to slash the wage bill by R160.2bn in the medium term.
It said that the cuts would include national and provincial departments as well as national public entities that received transfers from the government.
Mboweni said civil servants’ salaries had grown by nearly 40 percent in real terms over the past 12 years, without equivalent increases in productivity.
He said one of the cost-cutting measures would include no increase in the salaries of public office bearers in 2020/21, a move that could save the fiscus more than R120bn in the next three years.
Mboweni said the government had tabled an agenda item on the management of the public service wage bill at the Public Service Co-ordinating Bargaining Council, and would discuss with unions options for achieving the required reduction.
He said Public Service and Administration Minister Senzo Mchunu had already engaged public sector unions on the issue.
“For the credibility of our fiscal stance, that R160bn has to be found for all our sake,” he said. “There is no point in keeping the cents and losing the pounds. We are not only talking about the wage as an isolated item. We are talking about ministers’ flying economy, and all areas of wastage identified by Auditor-General (Kimi Makwetu) must be sorted out.
“There is R100bn floating around in legal medico cases that must be recouped. We are talking about water leaks, ministerial perks and other benefits that should be looked at. In the private sector, we pay you a salary so you can buy your own car and your own house. But in government it’s a different matter.”
Mboweni said the government also planned to introduce a remuneration framework for public entities and state-owned companies.
“One goal of this legislation is to eliminate excessive salaries and bonuses being awarded to executives and managers,” he said.