Finance Minister Malusi Gigaba said there needed to be an appreciation that the country was going through tough economic times and that public sector wage agreements must be affordable to the current fiscal framework. “The government will approach the wage negotiations with a view to getting the best deal in the current fiscal framework so that the deal we arrive at is affordable to the fiscus,” he said.
The Treasury said state employees' compensation spending had grown more quickly than the overall budget in the past eight years, and accounted for 35.3% of consolidated expenditure in 2016/17, up from 32.9% in 2008/09.
In documents released yesterday as part of the Medium-Term Budget Policy Statement process, the Treasury said that since 2011 the government had been forced to restrict employee head count growth to accommodate rising salaries. Spending on compensation has continued to grow more quickly than nominal gross domestic product.
“A new civil service wage agreement in which salary increases exceed Consumer Price Index (CPI) inflation, and without headcount reductions, would render the current expenditure limits difficult to achieve.
“The Medium-Term Expenditure Framework provides for an overall increase of 7.3% a year to accommodate improvements in conditions of service. Many departments are already at risk of exceeding this limit, even assuming that personnel numbers do not increase,” according to the documents.
Cosatu spokesperson Sizwe Pamla said yesterday that the government needed to stop blaming teachers, nurses, police officers, prison warders, doctors and municipal street cleaners for the wage bill.
“It must reduce the out-of-control salaries of state-owned enterprises' chief executives, executives and political office-bearers including the directors-general. We cannot blame nurses earning less than R200 000, while the chief executives of Transnet and Eskom are taking home more than R8million annually,” Pamla said.
A CPI +1% agreement would raise the national shortfall in 2018/19 to R8.2 billion, with the gap in provincial compensation budgets amounting to R4bn.
Negotiations on the next three-year public-service wage agreement were under way. Public sector unions have already thrown down the gauntlet at the government, demanding salary increases of between 10% and 12%. One of the demands also advanced by the unions is a R2500 housing allowance increase and the Public Investment Corporation investing in the Government Employees Housing Scheme.
Nazmeera Moola, the co-head of fixed income at Investec Asset Management, said that public sector wages needed to be controlled to stabilise the budget. “The two problems relating to public sector wages are the persistently high above-inflation wage increases and the dramatic growth in senior management positions, particularly among teachers, nurses and police,” Moola said.