Loading...

State wage deal to cost extra R66bn

May 23 2015 12:13
Amogelang Mbatha and Tshepiso Mokhema

Johannesburg - A wage deal agreed with nurses, teachers and other civil servants will cost the SA government an additional R66bn, Acting Public Service and Administration Minister Nkosinathi Mthethwa said.

The government will draw on funds from its contingency reserves to help pay for the salary increase that wasn’t budgeted for in its fiscal plan, Mthethwa said in a phone interview on Friday. The department will meet with the National Treasury to discuss financing options, he said.

South Africa averted a strike by 1.3 million workers after signing a three-year agreement this week that increases wages by 7% this year and 1% more than the inflation rate for the next two years. Housing and medical subsidies will also rise.

The Treasury made a provision in the February 25 budget for the wage bill to rise by an average of 6.6% in each of the three years through March 2018.

“It’s a good breakthrough for our economy,” Mthethwa said. “A public-sector strike would have been devastating for our economy as we caught the cold of the global economic crisis and we are still reeling from that.”

State personnel costs have surged 90% to R445bn since 2009 and account for almost 36% of total government spending, according to data from the National Treasury.

No headcount

The R66bn figure includes the additional cost of the wage increase, housing subsidy and medical benefits over three years, Mthethwa said.

The higher wage bill won’t result in job cuts, though the government doesn’t see any room to increase employment, the minister said. The state has added between 70 000 and 80 000 workers in the past decade, he said.

“Additional headcount would not be possible over the next three years,” he said. “It will be extremely impossible and those posts which have not been filled would be better to be left that way because we will not be able to afford it.”

The wage agreement is based on a projected inflation rate of 4.8%, Mthethwa said. Inflation was 4.5% in April.

- With assistance from Mike Cohen in Cape Town.

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.

jobs  |  wage bill  |  labour  |  government spending
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
115 comments
Comments have been closed for this article.
 

Company Snapshot

#SAVINGSMONTH

Five of SA's top financial brains, including SARB governor Lesetja Kganyago share their best savings habits.
 

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

I am not in a position to save because:

Previous results · Suggest a vote

Loading...