Calling time on SA’s reckless wage dispensation
Failure to stick to its pay ceilings will jeopardise the government’s undertaking that it will stabilise the debt ratio at about 56% of GDP
The biggest wild card affecting SA’s fiscal sustainability is whether or not the government will succeed in negotiating an affordable public-sector wage agreement. The budget allows for the wage bill to rise 7.2% a year on average over the next three years. Anything more generous will put extreme pressure on the country’s finances. For the past decade, the wage bill has grown by about 4% above inflation each year. Only about a quarter of this increase is because of expanded employment; the rest is a result of awarding higher wages to existing workers. Because the wage bill has grown faster than all other areas of expenditure, bar interest payments, it has overwhelmed other aspects of spending. At the same time, the average level of real remuneration has climbed significantly over time partly due to automatic promotions and salary progressions. The upshot is that public servants are now better paid than the median taxpayer at every point of the income distribution, bar those in the 9...
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