WATCH: Wage bill is a reflection of a broader problem

2015-10-22 07:21 - Matthew le Cordeur

Cape Town - The R62bn wage bill agreement is a reflection and symptom of a broader problem that needs addressing, according to Deputy Minister of Finance Mcebisi Jonas.

WATCH: Wage bill is a reflection of a broader problem

Jonas was talking to Fin24 about Treasury’s mini budget that was tabled in Parliament on Wednesday, in which it was revealed that the government would have to freeze posts and stop spending to account for the massive wage agreement in the public sector.

“The debate about the wage bill has been narrowed too much,” said Jonas. “The wage bill is a reflection of a broader problem,” he said. “(We need a) discussion in the country about the transformation of the public sector.

“You should look at it in the context of ensuring that we maintain our expenditure ceiling,” he said. “In order to do that, we need to manage all the variables involved in public spending.”

Jonas said there needs to be a discussion regarding the size, shape and cost of the public sector. “That is a conversation that we cannot postpone, quite frankly,” he said.

“What we've done now is to deal with the symptom (the wage bill) of a broader problem, which I think we should be addressing.”

READ: Wage bill dents govt spending plans

The agreement led to a compensation budget shortfall of R12.2bn in the current fiscal year, R20.6bn in 2016/17 and R31.1bn in 2017/18. The contingency reserves will be drawn down by R5bn in 2015/16, R10bn in 2016/17 and R26bn in 2017/18.

“This is not a sustainable situation,” Finance Minister Nhlanhla Nene told Parliament on Wednesday. “We recognise the need to improve the negotiating process and reform public sector remuneration.”

“Departments will need to reallocate spending from other priorities,” said Nene. “For the period ahead, the improvement in compensation means that there is no room for expanding government employment.”

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