Ramaphosa backs Mboweni's plan to trim public servants wage bill
The decision to try cutting the government’s runaway wage bill was a better available option in trimming down the state’s spending.
This is according to President Cyril Ramaphosa who, in his weekly newsletter, said that the other available option would have had a bigger and negative impact on civil servants and South Africans in general.
According to Ramaphosa, the government had two options available in cutting down its spending - renegotiate 2020 salaries increases with public sector unions or opt for the austerity measures which would have seen reducing salaries and cutting pensions.
Ramaphosa says they opted for the former which means that the salary increments agreement signed in 2018 would have to be revisited.
“We have made a deliberate decision not to pursue a path of austerity. Such a route would have seen deep cuts in spending on the social services that poor people rely on. It could have involved dramatically reducing the salaries of civil servants, the size of the public service, cutting bonuses and pensions, raising taxes and selling off key state assets,” Ramaphosa said.
“An austerity budget would have damaged our growth prospects further and weakened the ability of the state to stimulate economic activity and meet people’s needs.”
He says the budget presented by finance minister Tito Mboweni last week, was a balanced and well-considered measure to contain government spending and increase revenue.
Mboweni announced that the government wanted to shave off at least R160bn in the public sector wage bill.
The government collected R1,5trillion in revenue for 2021, but would spend R1,9trillion which is R370bn more than what they would collect. They now want to save around R261bn in the next three years by cutting down budgets allocated to some departments and reducing the rate at which salaries are growing.
He said that the wage bill was increasing at an alarming rate and that going back to the Public Service Coordinating Bargaining Council to try and review the agreed salary increases was the best available option which would not result in lowered salaries or pensions.
The 2018 agreement was that civil servants would get increases aligned with inflation plus two percent in April this year, but the government now wants to relook at the agreement.
This has been met with a lot of pushback from the unions who have accused to government of seeing public servants’ salaries as an easier target.
The state reached out to the public sector unions at the eleventh hour on the eve of the budget speech to renegotiate salary increases in an attempt to reduce the government wage bill.
This was outrightly rejected, with the unions saying the government should look elsewhere to save money.
Ramaphosa has appealed to the unions to go back to the negotiating tables in order to help the government find solutions to the runaway wage bill.
The government employs about 1,3million people at 325 departments amounting to 35% of the total national budget.
“Our approach is not to dramatically cut the size of the public service, but to examine the rate at which wages grow. Public service wages have on average increased at a much higher rate than inflation over many years, and we need to fix this if we are to get public finances under control,” Ramaphosa said.
“This also applies to the management of people’s personal finances, where if any expenditure item that rises at a rate more than inflation – be it electricity tariffs, mobile tariffs or food – will always put any individual person’s budget and finances under strain and out of kilter.”