Finance MEC Mlungisi Mvoko to slash public wage bill by R22bn

The Eastern Cape’s wage bill is set to be slashed by R22bn before the end of the 2023/2024 financial year — a move that is likely to set the provincial government and workers’ unions on a collision course.

The salary bill reduction was revealed by finance MEC Mlungisi Mvoko while tabling his 2021/2022 budget in Bhisho on Wednesday.

Both the national and provincial government have been talking about cutting the ballooning public sector wage bill for years.

When Mvoko tabled his special adjustment budget speech three months ago, he announced a job freeze as a measure to contain the wage bill.

Mvoko said budget reductions over the medium-term expenditure framework would see the province lose R28bn in equitable shares and conditional grants.

For the 2021/2022 financial year, the budget reduction was R7.2bn.

Of the R28bn, R22.8bn would come from the compensation of employees budget.

“This necessitates us to come up with mechanisms that would in the end preserve our ability to deliver services,” he said.

“We have been struggling with a service delivery dilemma where over 60% of our budget in the province goes to the wage bill, thus crowding out investment spending.”

Mvoko appealed to all departments to prioritise a review process of their organograms.

“This is to ensure that core service delivery posts are protected and noncore posts minimised to improve the capacity of the state to deliver.

“In our quest to have an Eastern Cape public service that delivers, resourcing of the state with the requisite human capital base and skills in line with priorities of the government is essential.

“Coupled with this, optimal management of human resources through performance management is critical to ensure maximum value is achieved on the wage bill.

“We believe that this exercise will augment our efforts of improving service delivery.

“Ultimately, we must reach levels of comfort where our wage bill is manageable and supports service delivery imperatives.”

Mvoko said to further cushion the province from budget reductions, a revenue regeneration and enhancement study needed to be implemented.

“For some time now, we have been supplementing our budget deficit through our revenue sources within the province.

“We are now going to implement a revenue study that we instituted intending to maximise our revenue generation.

“If implemented correctly, this exercise will provide further funds to assist to cushion our budget shortfall, though this is not sustainable in the long term.”

He said the study showed the province could generate R7.6bn.

“Revenue worth R6.1bn is expected through the department of public works.

“Other key departments in the value chain include transport, health and economic development, environmental affairs and tourism.”

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