Mboweni puts old civil servants in firing line

21 February 2019 - 10:23
By Thabo Mokone
Trade Unions unlikely to  accept finance minister Tito Mboweni's cost-cutting measures. /Gallo Images / Brenton Geach
Trade Unions unlikely to accept finance minister Tito Mboweni's cost-cutting measures. /Gallo Images / Brenton Geach

Finance minister Tito Mboweni has introduced measures to trim the public sector wage bill by R27bn in the next three years.

Tabling the Budget in the National Assembly yesterday, Mboweni said the measures to rein in the burgeoning civil service salary bill would include offering early retirement packages to about 30,000 public servants between 55 and 59 years old.

Mboweni said national and provincial departments would be phasing out the payment of performance bonuses to civil servants over the next four years, which amounted to R2bn a year.

This comes as government operates in a tough economic environment in which its spending for the 2019/2020 financial year (R1.8-trillion) outstrips its revenue collection (R1.5-trillion), leaving a budget deficit of R243bn.

Public sector salaries stand at R585bn a year. According to the Budget Review document, they are projected to cost R627bn by next year.

The minister said allowing older employees to retire early would save the government R4.8bn in 2019/2020, rising to R8bn a year by 2022.

"[At] times, this will [be] complemented by limits on overtime and bonus payments as well as pay progression."

He said he was also targeting the hiring of civil servants deployed to SA embassies across the world. "The system of staffing our diplomatic missions is unjustified and should be reviewed urgently."

There would be no increases for MPs in the 2019/2020 financial year.

"As a gesture of goodwill, members of parliament and provincial legislatures and executives at public entities will not be receiving a salary increase this financial year.

"My colleague, minister Ayanda Dlodlo [of public service and administration] will outline details of the early retirement framework during the course of the work."

The Budget Review document states that there would be no penalties for those who take up the early retirement offer, with government absorbing the related costs.

"[The] government has decided to scale up early retirement without penalties. Where feasible, older employees will be allowed to retire early, with younger employees taking their place.

"Departments are required to realise permanent savings of 50% of the cost attributable to early retirement.

"In December, there were 126,710 public service employees between 55 and 59 years.