AT THE TROUGH
SA’s reckless wage dispensation threatens fiscal sustainability
Gigaba has exposed SA’s reckless wage dispensation, but changing this will be difficult. Unions want a general salary increase of 10%-12%, though CPI is expected to average 5.4% over the next three years
The biggest wild card affecting SA’s fiscal sustainability — apart from what happens at Eskom — is whether government will succeed in negotiating an affordable public-sector wage deal in 2018. The medium-term budget allows for the wage bill to rise by 7.2%/year on average over the next three years and to stabilise as a share of government expenditure. Anything more generous will put extreme pressure on the country’s finances. As a warning shot, finance minister Malusi Gigaba has provided detailed figures on public-sector employment trends over the past decade, revealing how the public-sector wage bill has overwhelmed other aspects of spending, and how the upward drift in the distribution of employees has, over time, significantly raised the average level of real remuneration. Public servants are now better paid than the median taxpayer at every point of income distribution, bar those in the 95th percentile.Michael Sachs, who heads the budget office, says the information is being dis...
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