Public servants rake it in

26 February 2015 - 02:28 By Carol Paton
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ADVICE FOR NENE: The United Front protests outside parliament ahead of the Budget speech
ADVICE FOR NENE: The United Front protests outside parliament ahead of the Budget speech
Image: HALDEN KROG

South Africa is saddled with a ruinously high wage bill for its 1.3million public servants, with most of them in the top 30% of earners, says the Budget Review.

The sky high wage bill is the consequence of large adjustments to salaries and wages made between 2006 and 2010.

Personnel costs now make up 35.8% of government spending.

Finance Minister Nhlanhla Nene's budget documents show that the amount paid to government employees will rise from R445-billion this year to R539-billion in 2018.

Nene described the wage bill as "a concerning matter" but told journalists that he hoped lower than expected inflation in the medium term would help the government and unions reach an affordable settlement in their wage negotiations.

The government has budgeted for a cost-of-living increase of 6.6% for public servants but their unions' opening demand is for a 15% increase.

Rating agencies and analysts believe that public-sector wages are a serious threat to the viability of government finances and will have a sharp eye on wage settlements this year. Negotiations are under way and are scheduled to reach finality by April.

In the longer term, the Treasury says that it wants more control over personnel costs in government departments.

Head of the Budget Office Michael Sacks said: "The plan is to introduce stronger Treasury controls of personnel budgets. We are looking at how other countries do it. The Treasury would want to play a stronger role in appointments and other costs. We have got to solve this problem."

The Budget Review notes that "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 Sacks.

A study last year by the Treasury estimated that public sector workers "were in the top 30% of wage earners nationally", said the Review.

But public servants continued to demand wage increases in excess of CPI inflation.

In contrast to most other economies, public-sector wages in South Africa rose considerably in the wake of the global financial crisis. Due to occupation-specific dispensations made for health workers and teachers, the national and provincial salary bill rose by 17% between 2006 and 2009. This occurred "without a corresponding improvement in service delivery".

In municipalities, the wage bill rose even more dramatically - by 60%, to R43.6-billion, between 2007 and 2010. ©BDlive2015, additional reporting by Thabo Mokone

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