SA must be realistic, reduce state wage bill for growth and jobs: Ramaphosa

Government debt continues to rise, a position which is “precarious and unsustainable”.

And one of the ways to save is to reduce the public sector wage bill to curb the country's borrowing needs.

This is according to President Cyril Ramaphosa who wrote on Monday in his weekly newsletter that SA was spending more on debt repayments than on health.

Ramaphosa's posture in this regard is bound to set him on a collision course with public sector unions, most of which are affiliated to Cosatu, the ANC's alliance partner.

Already, Cosatu has termed finance minister Tito Mboweni's announcement that the  government would embark on a process to reduce the wage bill by more than R150bn in the next three years a “declaration of war”.

But Ramaphosa has reaffirmed Mboweni's announcement, saying the public sector wage bill is growing at an alarming rate and ought to be arrested if the country's economic fortunes are to change for the good of all.

“A large part of the savings will come from reducing the rate at which our wage bill grows,” wrote Ramaphosa.

“This will require focused discussions among all social partners, but particularly with public sector unions. These engagements need to be conducted in  a spirit of seeking solutions.

“I am heartened by the willingness of all parties to engage in serious negotiations aimed at finding a solution.”

ANC must take some responsibility for technical recession

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Ramaphosa, in a bid to ease the unions' concerns, said government had no plan to “dramatically cut the size of the public service” but rather to have a closer look at how to curtail the wage bill from growing at an unsustainable rate.

For instance, he said, it was cause for concern that salary increases in the public sector had for many years been effected at rates that were higher than the inflation rate.

“We need to fix this if we are to get public finances under control,” he said.

The government's spending on salaries was so high that it had now begun stifling spending on capital projects for growth such as infrastructure and other items crucial for service delivery.

The cost-cutting measures, said Ramaphosa, will also bite senior public office bearers who will have no salary increases this year.

Said Ramaphosa: “We will publish a new law this year introducing a remuneration framework for public entities and state-owned companies to prevent excessive pay for board members and executives.”

But the cost-cutting measures will not only be limited to the wage bill, he added.

Tackling corruption and putting an end to irregular, wasteful and fruitless expenditure would be among other ways employed to save costs.

The horses for courses approach in filling positions in the public sector, hopes Ramaphosa, will also improve public sector performance.  

“As we contain public spending, we are pursuing growth. It is for this reason that, despite the fiscal gap, there are no major tax increases,” said Ramaphosa.

“Instead, there is some relief for individual taxpayers and several measures to broaden the corporate tax base.

“We are fixing our public finances to make inclusive growth and job creation possible. Such times call for us to be realistic, not dogmatic. They call for co-operation, not conflict. Compromises and trade-offs will have to be made.”