The National Treasury is pushing for new legislation to create a uniform compensation structure for all managers across the public sector as it battles to cut or freeze the wage bill.
The public servants’ salary bill is one of the biggest threats to SA’s finances, and slashing it is vital for the country to claw back fiscal stability and demonstrate its commitment to ratings agencies to keep spending in check.
Average remuneration in the public sector is higher than average remuneration in the rest of the economy.
While there is already a structure in place that guides government salary levels, compensation levels are still largely at the discretion of the different spheres of the state. The Treasury wants a much tighter and more centralised approach to determining compensation.
“Our view is that we need to come up with single legislation that will govern the issues of remuneration, especially as it relates to public entities. We can exclude the state-owned companies in that legislation because they need to run like businesses and compete with other big players in the industry,” Marumo Maake, a Treasury official responsible for remuneration analysis, told parliament’s appropriations committee on Tuesday.
“With regards to entities that solely rely on government transfers, they should align themselves with the public service remuneration strategy,” he said.
Maake, who was part of a Treasury team briefing MPs on the Appropriation Bill, explained each sphere of government had its own remuneration approach, which is unsustainable. He said the salaries of senior managers at national and provincial level are determined by the department of public service & administration, “in concurrence with the minister of finance, and the salaries there are always influenced by what happens in the Public Service Co-ordinating Bargaining Council.
And then you have salaries of municipal managers, which are largely determined by the co-operative governance minister in concurrence with the minister of finance.
“And then there are state-owned entities, whose salaries are determined by their boards.
“We have instances where some of the entities write to the minister of finance requesting for concurrence, but not all entities are doing that. Entities tend to just go ahead and implement their own salary increases.”
The Treasury has previously highlighted that rapid growth in compensation spending has been driven by real increases in wages and benefits rather than higher employment levels.
In an earlier detailed analysis, the Treasury pointed out that 29,000 public servants, plus members of the national executive, MPs and members of the provincial executive, each earned more than R1m in 2018. After adjusting for inflation, this is more than double the number of public servants earning more than R1m in 2006/2007.
According to the Budget Review, compensation spending will increase marginally, from R665.1bn in 2021/2022 to R702bn in 2024/2025, at an average annual rate of 1.8%.
Unions
The Treasury’s push for the legislation could also appease union leaders, who have raised the widening pay gap between senior public officials and rank-and-file public servants in their pursuit for higher wages.
“We took a decision with the [department of public service & administration], after engagement with the labour unions, that we will embark on a process to review remuneration policies across all public sector institutions with the view of making recommendations to cabinet on a fair remuneration policy that can be adopted in the public sector,” Maake said, also emphasising the need to contain the wage bill across the board.
While labour federation Cosatu, a key ANC alliance partner, has backed President Cyril Ramaphosa’s efforts to clean up the government, it is not on the same page about the push to slash the wage bill.
The federation previously said it condemned the government’s fixation with singling out the public sector wage bill and its “deafening silence” regarding wastage, corruption and fruitless expenditure incurred through the huge outsourcing of public service functions.
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