South Africa is saddled with a problematically high wage bill for public servants, with most public servants in the top 30% of earners in the country‚ says the Budget Review.
The high wage bill is the consequence of large adjustments to salaries and wages made between 2006 and 2010‚ which raised personnel costs in perpetuity with little prospect of changing this structural balance.
Personnel costs now make up 35.8% of government spending.
Documents show the total amount paid to compensate government employees is set to rise from R445-billion this year to R539-billion in 2018.
Between 2006 and 2009 the national and provincial salary bill rose by 17%. In municipalities it was more dramatic. Between 2007 and 2010 total local government spending on personnel increased by 60% from R27.3-billion to R43.6-billion.
Finance Minister Nhlanhla Nene described the wage bill as “a concerning matter” but said in a briefing to journalists he hoped lower than expected inflation over the medium term would help the government and unions reach an affordable settlement.
The government has budgeted for a cost-of-living wage increase of 6.6% while the opening demand of unions is 15%.
Inflation over the three-year period is between 4.3% and 5.9%.
Nene has in the past said wage increases should not go more than 1% above inflation.
Anything higher than that would mean government would have to “reduce capital expenditure‚ introduce more stringent controls on public employment or find ways to curtail expenditure on other critical priorities”.
Credit rating agencies and analysts believe public sector wages pose a key risk to state finances and will have a keen eye on the wage settlement this year. Negotiations are under way with the aim of reaching finality by April.
In the longer term Treasury wants greater control over personnel costs in state departments and a bigger say over appointments and benefits.
The Budget Review notes “over the past decade‚ public sector unit labour costs have increased by more than 80% in real terms‚ with an average annual growth rate of more than 6% above inflation”.
“This is unsustainable‚” said budget office head Michael Sacks. — BDlive with additional reporting by Thabo Mokone
Public wage bill soars
The high wage bill is the consequence of large adjustments to salaries and wages made between 2006 and 2010‚ which raised personnel costs in perpetuity with little prospect of changing this structural balance.
Personnel costs now make up 35.8% of government spending.
Documents show the total amount paid to compensate government employees is set to rise from R445-billion this year to R539-billion in 2018.
Between 2006 and 2009 the national and provincial salary bill rose by 17%. In municipalities it was more dramatic. Between 2007 and 2010 total local government spending on personnel increased by 60% from R27.3-billion to R43.6-billion.
Finance Minister Nhlanhla Nene described the wage bill as “a concerning matter” but said in a briefing to journalists he hoped lower than expected inflation over the medium term would help the government and unions reach an affordable settlement.
The government has budgeted for a cost-of-living wage increase of 6.6% while the opening demand of unions is 15%.
Inflation over the three-year period is between 4.3% and 5.9%.
Nene has in the past said wage increases should not go more than 1% above inflation.
Anything higher than that would mean government would have to “reduce capital expenditure‚ introduce more stringent controls on public employment or find ways to curtail expenditure on other critical priorities”.
Credit rating agencies and analysts believe public sector wages pose a key risk to state finances and will have a keen eye on the wage settlement this year. Negotiations are under way with the aim of reaching finality by April.
In the longer term Treasury wants greater control over personnel costs in state departments and a bigger say over appointments and benefits.
The Budget Review notes “over the past decade‚ public sector unit labour costs have increased by more than 80% in real terms‚ with an average annual growth rate of more than 6% above inflation”.
“This is unsustainable‚” said budget office head Michael Sacks. — BDlive with additional reporting by Thabo Mokone
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