Retirement helping to ease public wage burden, says Mboweni

2019-02-20 14:50 - Khulekani Magubane, Fin24
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Minister of Finance Tito Mboweni announced in his 2019 Budget speech that gradual "natural attrition" was playing its part in easing the pressure that the public service wage bill placed on the fiscus.

He said that, while compensation as a share of consolidated spending increased for most departments over time, recent data showed employee numbers are declining at a rate sufficient enough to absorb wage agreement pressure.

Mboweni said monthly payrolls in 2018 showed an average of about 16 000 fewer employees than during the same period in 2015. The Budget review proposes a reduction of R27bn to compensation budgets between the 2019/20 and 2021/22 financial years.

"In time, this will be complemented by limits on overtime and bonus payments as well as pay progression. The system of staffing our diplomatic missions is unjustified and should be reviewed immediately," said Mboweni during his speech.

As a result of these trends, projected national and provincial compensation spending is likely to be lower than budgeted for in 2018/19, according to the 2019 Budget review.

However, the Budget review restated the fact that the 2018 Medium-Term Budget Policy Statement projected a shortfall of about R30bn over the 2018 Medium-Term Expenditure Framework period if departments' employee numbers remained static.

"Compensation accounts for more than 35% of consolidated public spending and has been a major driver of the fiscal deficit. Spending reductions have typically fallen on goods and services, and capital investment," states the Budget review.

"Over the medium term, government will take additional steps to manage growth in compensation. The combination of natural attrition and active measures allows for a reduction of compensation budgets by R5.3bn in 2019/20, R11bn in 2020/21 and R10.7bn in 2021/22," the Budget review said.

The review said a wage freeze for political office holders will save R132.8m of the amount transferred through the provincial equitable share over the Medium-Term Expenditure Framework period.