Finance minister Enoch Godongwana has proposed an allocation of R45.6bn to provide for the carry-through costs for the 2022/2023 public-service wage increase.
In addition, the budget also includes pay progression, a housing allowance and other benefits for civil servants, Godongwana said on Wednesday during his budget speech to parliament.
He said the budget has also provided additional funding for safety and security, education and health.
In health, the funds are to be used to hire new staff, address shortfalls in compensation budgets and retain additional health workers appointed during the pandemic as well as to clear the backlog in health services, he said.
“But, as for the wage negotiations that just commenced, the budget does not pre-empt the outcomes,” Godongwana said.
“Nevertheless, this and future wage negotiations must strike a balance between fair pay, fiscal sustainability, and the need for additional staff in front-line services.”
This was the minister’s response to the latest demands by public sector unions, which threatened to embark on a strike on Wednesday, the day of the budget speech, if their demands are not met.
Business Day reported that the Public Servants Association (PSA) has demanded an above-inflation wage increase of 12.5% for its more than 235,000 members, saying hard-pressed public servants had not received any real increases over the past four years.
The PSA said the employer proposed a draft salary offer for 2023/2024 for a 4.7% pay hike on a sliding scale in year one, with increases in line with the consumer price index (CPI) in the second and third years during a special sitting of the Public Service Co-ordinating Bargaining Council last Friday.
The union said it was still angered by the government’s unilateral implementation of a 3% pay hike for the country’s 1.3-million public servants in 2022.
The increase, which includes an extension of the R1,000 after-tax cash gratuity, was made by the government in line with its commitment to rein in the public-sector wage bill, which accounts for more than one third of government spending.
According to the Budget Review, compensation spending will increase from R690.4bn in 2022/2023 to R760.6bn in 2025/2026, growing at an average annual rate of 3.3%, mainly due to the carry-through costs of the public-service wage increase implemented in 2022/2023.
Warning that an unbudgeted wage settlement will require significant trade-offs, Godongwana said “it will mean that funds must be clawed back in other ways”.
“The wage bill is a significant cost driver. Mainly, this will mean restricting the ability of departments and entities to fill non-critical posts. It will also mean achieving cost-savings from major rationalisation of state entities and programmes,” he said.
“Unaffordable public-service wage bill settlements is a major risk to fiscus.”
Godongwana said as indicated by President Cyril Ramaphosa in the state of the nation address (Sona), the National Treasury has already identified where large savings can be achieved.
He said the Treasury will work with the presidency on concrete proposals to achieve savings by rationalising or closing public entities. Recommendations will be made to the president and cabinet and should form part of the next budget.
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