State wage bill to cost SA R61bn

Cape Town - A new three-year deal to increase wages for public servants will cost the country R61bn, acting Public Service and Administration Minister Nathi Mthethwa said on Monday.

"This will see the wage bill increase from R412.7bn to R466.8bn over the 2015 medium-term economic framework," Mthethwa said in a written response to questions in parliament.

The government agreed last month to a 7% wage hike in the first year, and to increase housing and medical aid pay, but is now looking to pay 0.6 percentage points less.

READ: Unions slam new govt wage move as 'abominable'

Unions representing around 1.3 million nurses, teachers and police officers have threatened to withdraw from the wage agreement, raising the possibility of a protracted strike.

Any strike action would further dampen investor sentiment and business confidence, which has been hurt by a wave of industrial action in the key mining and manufacturing sectors over the past two years.

READ: Business confidence slumps to 16-year low

The public sector wage bill has swelled more than 80% over the last decade as annual increases averaged more than 6% above inflation, and the government is under pressure to rein in spending and curb costs as rating agencies flag possible downgrades.