No word on public sector wage bill in adjustment budget

Government and labour have been at loggerheads since Mboweni made a move to renege on 2018 wage agreement in February.
Public sector wages will account for close to half of government expenditure in 2020. Image: Elmond Jiyane, GCIS

Finance Minister Tito Mboweni’s supplementary budget has provided no detail on his controversial move to cut salary increases on public sector wages. 

The adjustment budget was necessitated by the Covid-19 pandemic as government spending was reprioritised towards containing the health, social and economic fallout caused by the virus and nationwide shutdown. 

In February Treasury made a move to reduce overall government expenditure, particularly targeting the public sector wage bill where savings of R160 billion were expected over the next three years. 

Read: Rand strengthens as public sector wage bill is pruned (Feb 2020)

Treasury set out reductions of R37.8 billion in 2020/21, R54.9 billion in 2021/22 and R67.5 billion in 2022/23.

The supplementary budget review document states that cabinet has “reiterated support for the proposed public-service wage bill reductions announced in February, which will improve the composition of spending”.

This year nearly half of consolidated revenue will go to pay civil servants,” said Mboweni while tabling the budget to parliament on Wednesday. 

“I value the important work public servants do, but we are guaranteed a painful reckoning if we continue in this way.” 

In February public-sector unions did not respond well to the announcement especially because the 2020 reductions meant that the government would renege on implementing salary increases which were agreed upon in the 2018 three-year wage agreement. 

The battle between unions and the government has been ongoing. The dispute is before arbitration, and public-sector unions have also taken this fight to the Labour Court where they are asking the court to order that government should honour the agreement.

On Wednesday Mboweni simply wished Public Service and Administration Minister Senzo Mchunu well in his negotiations with the labour unions in the Public Service Co-ordinating Bargaining Council, where he is leading the discussions on behalf of the government. 

“Our overall objective is for a compensation system that is fair, transparent and fiscally affordable and it is within that kind of framework that we hope that the minister will be able to lead the process,” Mboweni told media after his presentation.

Treasury says failure to achieve the envisioned R160 billion wage bill cut as outlined in February will mean wages and other spending priorities will be subject to deeper reductions in outer years of the spending framework. This will also mean higher revenue increases for taxpayers.

Listen to Nompu Siziba’s June 22 interview with Nic Spaull, senior researcher in the Economics Department at Stellenbosch University:

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Don’t be a coward Tito. You must support him Cyril.

Because it’s not going to happen.

The structural reforms in the economy are like the turnaround plans for SAA.

A succession of pipe dreams with zero implementation.

In a couple of years we will be Zimbabwe.

The ANC has proven time and again to be incapable of taking action and doing the right thing.

Can’t see why this time will be different

Quite simply put we always said that one day the money would dry up. All Covid did was fast forward that day. That day may just be looming around the corner. Circumstances have played in Tito’s hands and he now has the perfect opportunity to close the bank because there really is almost no money left.

Our top four issues in SA:
1) Corruption
2) Wage bill
3) Crime
4) Corona

Solve the top 3 and the 4th will be easier to deal with.

Job creation is a product of wealth creation. For wealth creation, you need entrepreneurs and an environment that nurtures entrepreneurship. For the last twenty-six years, we have done it the other way round. The burgeoning and in many ways superfluous labour force has been financed by a shrinking tax base caused by entrepreneurs, the source wealth that provides the tax income, fleeing the sinking ship.

Socialisms biggest criticism of capitalism is that it benefits a few at the expense of the masses. What we see now is that socialism is also just benefiting a few. The only difference being that instead of having massive reserves to finance desperately needed development we have massive debt and no way of getting out of it other than borrowing even more.Shame, shame!

Seems like a case of you cant give what you dont have? Add to that: defer now and enjoy later – this crisis has changed everything and perhaps patience and consideration of the stark fiscal reality will go a long way to surviving another day / month / year…

The South African Civil Service Force is the biggest, smoothest looting machine in the world.From the top to the tea person.

End of comments.

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