Mboweni warns public service retrenchments could be on the cards

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Minister of Finance Tito Mboweni has cautioned that the public wage bill is unsustainable, citing that retrenchments in the public sector might be eminent.

Addressing members of Parliament in Cape Town during his 2019 Budget Speech, Mboweni has warned that something has to be done by government to address the high wage bill in the public sector.

The Minister of Finance together with the Minister of Public Service and Administration, Ayanda Dlodlo will come together with key interventions for government to ensure measures of reducing compensation spending.

Mboweni stressed that as measures to ensure that government is able to spend they are willing to open talks with employees to take early retirement.

“The first step is to allow older public servants who want to do so, to retire early and gracefully.”

Through this measure, government will save an estimated R4.8 billion in 2019/20, R7.5 billion in 2020/21 and R8 billion in 2021/22.

Concerns over South Africa’s wage bill have been growing, with numerous economists citing that government needs to contain public service wage bill.

According to the Organisation for Economic Cooperation and Development (2017), South Africa’s government wage bill is one of the highest among its developing country peers.

The consolidated wage bill increased rapidly from 32.9% of spending in 2007/08 and remains at about 35% of total expenditure in 2017/18.

During his 2018 Medium-term Budget Policy Framework Speech (MTBPS), Mboweni suggested that government might have to consider retrenchment of close to 30 000 public servants.

Mboweni used his Budget Speech to further announce that in efforts to curb government spending on the wage bill members of Parliament and provincial legislatures and executives at public entities will not be receiving a salary increase this financial year.

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