The South African government has put in motion plans to cut the public wage bill after announcing a September deadline for workers aged between 55 and 60 to retire without penalties.
This comes after finance minister Tito Mboweni announced during the Budget Speech in February that the state plans to cut the national and provincial budget by R27 billion over the next three years.
Mboweni said that the current wage bill was unsustainable.
“The public wage bill is unsustainable. We must shift expenditure to investment,” Mboweni said in his speech.
But, in documents detailing the guidelines, the Department of Public Service and Administration (DPSA) blames the decision squarely on the 2018 wage settlement agreement with unions.
“In the recent 2019 Budget Speech, the minister of finance reiterated the measures that the government needs to put in place to assist with the growing budget deficit, which has accrued due to government expenditure on the 2018 wage settlement agreement,” said the Department of Public Service and Administration’s document.
“During and post the 2018 wage negotiations, economic realities and financial pressures were discussed with organized labour.
“The purpose was to jointly explore the implementation of tangible measures to ensure that the budgetary ceiling is not exceeded, and that there is no negative impact on job security, as well as to ensure that departments continue to perform efficiently and effectively with regard to human resources management, within the current Medium Term Expenditure Framework and beyond,” the department added.
The department also indicated that money would be made available for the early retirement scheme.
“Pension expenditures incurred as a result of granting early retirement without pension penalties will be funded by National Treasury.”