No more funds for public-sector wages
Non-penalised early retirement and natural attrition will bring the wage bill down — but at the cost of experience and institutional knowledge
The public-sector wage bill will be reduced by R37bn over the next three years through early retirements and natural attrition, with no additional money allocated for salaries, according to the 2019 budget. The wage bill accounts for more than 35% of consolidated public spending and has been a major driver for the fiscal deficit, with spending reductions typically falling on goods and services and capital investment. Reducing the public wage bill is key to rebalancing the budget and shifting the composition of expenditure away from consumption towards investment. This has also been a key factor raised by ratings agencies. After 2018’s public-service wage agreement increased wages above inflation, the medium-term budget policy statement (MTBPS) projected a R30bn shortfall, but according to the 2019 budget, employee numbers are declining, at a sufficient rate to absorb wage agreement pressures.
This is due to natural attrition, which acting head of the Treasury’s budget office I...