Mboweni's sword to fall on Public Sector Wage Bill

Finance Minister Tito Mboweni has set his sights firmly on a reduced Public Sector Wage Bill to stabilise the country’s debt outlook and reduce spending, writes Legalbrief. Mboweni, in his Medium-Term Budget Policy Statement (MTBPS) speech in Parliament last week, announced that government planned to introduce measures to cut down on the public sector wage bill. According to the MTBPS, narrowing the deficit and improving the composition of spending required reductions in the growth of the wage bill, which accounts for 35% of the consolidated budget. Polity reports that analysis indicates that growth in the public service wage bill needs to decline to reduce the pressure on the delivery of goods and services, as well as infrastructure. The wage bill accounted for 46% of tax revenue in 2019/20, mainly owing to the above-inflation increase in the average remuneration over the past decade. Mboweni indicated that the National Treasury would hold discussions in the relevant bargaining structures and with other stakeholders to achieve a sustainable arrangement with regard to the Bill. Moreover, he called on state-owned companies, other public entities and the private sector for board and executive management compensation and benefits to be reduced. Also, the report says, to tackle the inflated Bill, President Cyril Ramaphosa has agreed to several guidelines that will apply to members of the Cabinet and members of provincial executives.

The public servants’ salary bill is one of the biggest threats to SA’s finances, and successful efforts in slashing it are vital for the country to stave off a ratings downgrade from Moody’s Investors Service, reports Business Day. Mboweni said for every R100 the state collected in tax revenue, R46 was spent on paying the salaries of public servants. Growth in the government’s compensation bill will need to be reduced and additional revenue measures may be needed. The final shape of the adjustment will be announced around the 2020 budget, the Minister said. But, the report says, Cosatu affiliate the National Education, Health and Allied Workers Union, which represents more than 235 000 public servants, has already branded potential job cuts a ‘neo-liberal’ agenda.

The public sector trade unions are planning to push back against the plans, saying wasteful expenditure must be addressed first before curbs on compensation can be discussed. According to a Business Times report, Tahir Maepa of the Public Servants Association said: ‘We don't take kindly to the fact that we are going to be dragged to the negotiation table with the barrel of a gun to our heads. These were the things that should have been put on the bargaining forum for us to deal with instead of him announcing (the cuts). What is the purpose of negotiating? We are going to take them on.’ Zwelinzima Vavi of the SA Federation of Trade Unions said in the report that public servants had been ‘facing a squeeze for the past six years’ and were ‘being blamed for everything by the neo-liberals.’ Cosatu president Zingiswa Losi said: ‘If you make workers accept sacrifices and not correct where the waste actually is, then the problem will continue.’