R20.5bn to public sector wage bill

Finance minister Enoch Godongwana announced an additional R20.5bn towards the cost implications of the 2021 public service wage agreement

24 February 2022 - 08:18
By Nomazima Nkosi
Godongwana cautioned against making any permanent increases to spending until SA's economy showed an upward trajectory.
Image: Reuben Goldberg Godongwana cautioned against making any permanent increases to spending until SA's economy showed an upward trajectory.

A R182bn tax revenue collection windfall has given the government wiggle room to make additional allocations to the public wage bill and the continuation of the social relief of distress grant.

Finance minister Enoch Godongwana announced an additional R20.5bn towards the cost implications of the 2021 public service wage agreement.

He also announced that R44bn had been allocated to extend the R350 Covid-19 social relief of distress grant by a further 12 months.

Godongwana cautioned against making any permanent increases to spending until SA's economy showed an upward trajectory, adding that spending must be curbed and the government take a cautious approach as previously stated by National Treasury. 

“The improved revenue performance is not a reflection of an improvement in the capacity of our economy. As such, we cannot plan permanent expenditure on the basis of short-term increases in commodity prices.

“To be clear, any permanent increases in spending should be financed in a way that it does not worsen the fiscal deficit,” Godongwana said.

With the windfall, Godongwana said the consolidated budget deficit was projected to narrow from 5.7% of GDP in 2021/2022 financial year to 4.2% of GDP by the 2024/2025 financial year.

“This is also the first time since 2015 that we are reducing the borrowing requirement, using some of the extra revenue we have collected.

“The borrowing requirement decreases by R135.8bn this year and a total of R131.5bn over the next two years,” he said.

Reacting to the announcements, Cosatu national spokesperson Sizwe Pamla said it was critical that the 2022 public service negotiations were settled soon and the 2020 wage agreement honoured.   

“The projected below-inflation salary increases over the MTEF [medium-term expenditure framework] must be rejected. An austerity-driven approach to this matter will simply see a rise in the brain drain from the public service of skilled workers, in particular nurses, doctors, teachers, and engineers.   

“The government needs to show some courage and cut the exorbitant packages paid to politicians and the senior management in the state and SOEs.  A single collective bargaining and wage regime is needed for the entire state as are physical headcounts to weed out ghost posts,” Pamla said.