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South Africa will spend an additional R37,4 billion to fund public sector salary increases this year, swelling the wage bill to R730 billion and surpassing a level Finance Minister Enoch Godongwana once thought would be reached in 2025.
“The recent wage agreement has placed upward pressure on the wage bill. This means that in the current financial year, the National Treasury must identify over R37,4 billion in savings to cushion the blow on the fiscal framework,” Godongwana said on Tuesday afternoon while delivering his budget vote in parliament.
His remarks on Tuesday effectively mean the government needs an extra R37,4 billion to foot the bill for workers’ wages.
Godongwana said some of the risks to South Africa’s fiscal outlook had materialised since he tabled his February budget when he allocated R701,2 billion for the compensation of government employees.”Key among these is the outcome of the public sector wage negotiations, which the Budget did not pre-empt,” Godongwana said.
“The result is that the macro-fiscal position presented in the budget has changed adversely and significantly. The risks into the future remain high,” he said.
On Tuesday, Godongwana said the treasury, which is trying to tighten spending, now has to identify the equivalent amount (R37,4 billion) in savings to cushion the impact of the recent 7,5 percent wage agreement as well as to try and recover the funds it has to channel towards the increases.
“A key challenge for the fiscus is the management of the public sector wage bill,” he said.
At the end of March, the Department of Public Service and Administration (DPSA) tabled a final offer to workers, comprising a 3,3 percent salary hike and a 4,2 percent increase relating to a cash gratuity, both pensionable. – Moneyweb
Online Reporter