“Although the agreement exceeds the 2024 budget and MTBPS projections. Its three-year duration reduces uncertainty in budget planning.
“In terms of the 2025 public-service wage agreement, remuneration of government employees will rise by 5.5% in 2025/26, 1 percentage point above projected consumer price index [CPI] inflation. Over the subsequent two years, remuneration of employees will align with CPI.”
At the same time, there has been no departure from government’s plan to trim the number of civil servants by enticing its older employees with an early retirement package. An amount of R11bn remains set aside over the next two years as an incentive for at least 30,000 government workers over the age of 55 to take early retirement without incurring related penalties.
“The plan is to manage head counts by incentivising employees over 55 years old to retire and moderate compensation spending as new recruits join the public service at entry-level salary grades.
“Preliminary savings are expected to average R7.1bn per year over the medium to long term. Savings will be retained by departments.”
The National Treasury’s early retirement plan does not enjoy the support of dominant trade union federations such as Cosatu, however. They have slammed it as undesirable, warning it could lead to a loss of experienced and skilled workers to the detriment of service delivery.
TimesLIVE
BUDGET 2025 | Government workers to get 5.5% pay rise
Budget documents show 5.5% public service wage hike will be implemented over next three years at cost of R23bn
Finance minister Enoch Godongwana is sticking to the public service wage agreement that will see government employees earning an above-inflation pay hike of 5.5% per year over the next three years.
This is despite a reduction in the proposed hike in VAT that that will see the South African Revenue Service collecting less tax revenue than he had projected in his original budget that was postponed last month.
The February 19 budget was postponed after the ANC and its partners in the government of national unity clashed over Godongwana’s plan to increase VAT by two percentage points in a bid to raise R68bn to, among others, fund the salary hikes of public servants at levels above the prevailing inflation rate.
The 0.5 percentage point VAT hike he announced in parliament on Wednesday will only raise government coffers by an additional R28bn in the 2025/2026 financial year. A VAT hike of the same amount will be imposed the following year.
However, the budget documents Godongwana tabled in parliament show that the 5.5% public service wage hike remained a sealed deal, to be implemented over the next three years at a cost of R23bn.
“This agreement will cost the fiscus an additional R7.3bn in 2025/26, R7.8bn in 2026/27 and R8.2bn in 2027/28. Government will partially draw down on the contingency reserve to meet these costs,” the document reads.
“Although the agreement exceeds the 2024 budget and MTBPS projections. Its three-year duration reduces uncertainty in budget planning.
“In terms of the 2025 public-service wage agreement, remuneration of government employees will rise by 5.5% in 2025/26, 1 percentage point above projected consumer price index [CPI] inflation. Over the subsequent two years, remuneration of employees will align with CPI.”
At the same time, there has been no departure from government’s plan to trim the number of civil servants by enticing its older employees with an early retirement package. An amount of R11bn remains set aside over the next two years as an incentive for at least 30,000 government workers over the age of 55 to take early retirement without incurring related penalties.
“The plan is to manage head counts by incentivising employees over 55 years old to retire and moderate compensation spending as new recruits join the public service at entry-level salary grades.
“Preliminary savings are expected to average R7.1bn per year over the medium to long term. Savings will be retained by departments.”
The National Treasury’s early retirement plan does not enjoy the support of dominant trade union federations such as Cosatu, however. They have slammed it as undesirable, warning it could lead to a loss of experienced and skilled workers to the detriment of service delivery.
TimesLIVE
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