POLITICS

Treasury Pushes To Bring Down The Public Sector Wage Bill

Treasury's director-general hints at "other measures" besides natural retirements to force down the massive wage bill.

27/02/2017 05:45 SAST | Updated 27/02/2017 11:05 SAST

National Treasury is deeply aware of the unsustainability of government's wage bill, which now gobbles up over 36% of the national budget of more than R1,5-trillion.

Fuzile Lungisa, director-general at Treasury, said the department was working with the department of public service and administration (DPSA) to reduce the spend on civil servants' wages. Some of the measures could include retrenchments.

"We are relying on natural attrition, you know, people who leave the civil service or just retire . . . we're working with DPSA to look at labour laws as well, we're also considering voluntary severance packages, to see if that is adequate (to force down the wage bill)," Lungisa said.

He added, without clarifying: "We're also looking at other measures."

Lungisa told journalists before the tabling on the budget on Wednesday the current wage agreement between government and labour unions expires in March and that it will be renegotiated within the constraints and limits of government's fiscal framework.

Government's massive wage bill is cited by Treasury as one of the threats to fiscal sustainability, with Treasury noting is has "has increasingly crowded out other areas of expenditure, limiting government's ability to improve the composition of spending in favour of capital budgets".

In other words: we are paying so much for civil servants' and bureaucrats' salaries and wages that government is struggling to finance other crucial spending programmes.

Treasury, which has been fighting political battles at the expense of wrestling with economic realities, seemed very much aware of the dangers the large wage bill poses.

"Between 2008-'09 and 2015-'16, national and provincial government salaries rose about 1.8% faster than inflation. In total, salaries have nearly doubled, compared with an increase in the consumer price index of about 70%," Treasury said in its Budget Review.

And, Treasury says, there was almost a total prohibition on new appointments in the civil service: "In recent years, government has withdrawn nearly all identified funding for vacant posts and blocked appointments to non-critical vacant posts on the payroll system, pending the submission of revised human resource plans by departments."