File image: IOL.

CAPE TOWN - According to reported data issued by the South African Institute of Race Relations, government’s public wage bill currently at R587 billion, is one of the single biggest problems in the budget. 

The reported data by IRR shows that the annual government wage bill allegedly constitutes almost a third of the annual budget. 

The sizeable public wage comes after former finance Minister Malusi Gigaba announced the wage bill in his maiden budget speech last year.

Gigaba said that while government’s public wage bill stands at R587 billion, it is expected to swell to R630 billion by 2020. 

Business Report contacted National Treasury and asked whether this amount can somehow be reduced to compensate for basic services within the country. National Treasury responded and said that the compensation baselines in the 2018 Budget maintain this status quo.

“Between 2009/10 and 2012/13, strong growth in the public-sector wage bill increased compensation as a share of national and provincial non-interest spending. The public-sector wage bill has increasingly crowded out other spending and limited government’s ability to increase public employment. In the 2016 Budget, government reduced the compensation ceilings of national and provincial departments by R10 billion in 2017/18 and R15 billion in 2018/19. The compensation baselines in the 2018 Budget maintain this status quo. Government is working to ensure that the on-going wage negotiations result in a public-service wage agreement that does not disrupt compensation ceilings”, said National Treasury. 

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Also reported is the IRR claim that the annual increases in the public sector have largely outstripped nominal GDP. When asked how concerning this is, Treasury said that they typically consider the relationship between annual salary increases and the CPI inflation rate.

“Treasury typically considers the relationship between annual salary increases and the CPI inflation rate. Between 2008/09 and 2015/16, national and provincial government salaries rose about 1.8% faster than inflation”, said Treasury. 

Treasury added that an agreement which locks in salary increases that exceed consumer price index inflation would make expenditure limits difficult to achieve. 

“Headcount in the public service has levelled out in recent years, relieving some of the upward pressure on the wage bill. If a moderate salary negotiation agreement is reached, the government wage bill will stabilise as a share of the budget over the medium term. In recent years, government has withdrawn nearly all identified funding for vacant posts and blocked appointments to non-critical vacant posts, pending the submission of revised human resource plans by departments”. 

While Treasury claims that headcount in the public service has levelled out, relieving some upward pressure on the wage bill, government's wage bill will continue to be closely scrutinised. 

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- BUSINESS REPORT ONLINE