Early retirement option as government puzzles cost saving

Minister of Public Service and Administration Senzo Mchunu.
Minister of Public Service and Administration Senzo Mchunu.
Image: Trevor Samson/Business Day

The government is forging ahead with plans to trim the unsustainable public sector wage bill‚ which is almost R600bn‚ representing 35% of projected annual spending.

Minister of Public Service and Administration Senzo Mchunu revealed in a parliamentary reply that his department and Treasury were looking at cost-saving measures such as early retirement.

In July last year‚ the department said public sector workers over the age of 60 would be offered voluntary retrenchment. The decision followed the conclusion of a new three-year wage agreement that bust the budget by about R30-billion.

The department said then that it would try to encourage early retirement by topping up pension funds for those who take the package.

In addition‚ it said it would review the government’s performance management and incentive systems‚ and how to ensure more effective management of allowances.

While the department has not clarified how many jobs would be affected‚ Business Day reported previously that it can be assumed‚ that if the savings target is R30bn over the next three years‚ the government would need to cut salaries by R10bn a year. This would imply scaling down thousands of jobs.

- TMG Digital

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