Gov announces plans to cut public service wage bill

South Africa’s government could be heading for a showdown with labour federations after it announced that it was proceeding with measures to slash the public sector wage bill which, at R600 billion a year, makes up 35% of the country’s R1.67 trillion budget.

The move is expected to be welcomed by Moody’s Investor Service which, unlike other leading peer organisations S&P Global and Finch, is the only remaining ratings agency that has sustained the country’s sovereign debt at above-investment grade.

Organised labour though is expected to baulk at public service and administration minister Senzo Mchunu’s plans to curb the salary and pension costs of public officials.

He said numerous human resources options had been identified where the wage bill could be cut.

One of these is offering public service workers early retirement without any lump sum penalties.

And although such a move will cost the government about R16 billion in the short term, of which a portion will come from the budget’s contingency reserve and the rest from the Government Employee Pension Fund, it’s expected to be instrumental in helping Finance Minister Tito Mboweni realise his goal of slashing the wage bill by R37 billion over the next three years.

Labour federation Cosatu, which represents 235 000 public servants, has already said it will oppose any cost-cutting measures that might affect the livelihood of public service sector workers.

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