Cape Town - The 2023 Budget presented by Finance Minister Enoch Godongwana in Parliament on Wednesday has made no provision for public service wage increases as wage negotiations had only started this month.
Instead, Godongwana said the wage negotiations have just begun and his Budget did not want to pre-empt the outcome of the talks with the labour unions.
“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,” he said.
Godongwana told the media at a briefing earlier that labour unions had at their summit last indicated against him putting a figure in the Budget before negotiations took place.
“We agreed to start early, but for a number of reasons we could not,” he said.
The minister said cashback agreed to with the unions would get started in April, if no agreement was reached by the end of March.
“If there is no agreement, the cash-back kicks in because there was no increase in 2022,” he said.
National Treasury estimated that the compensation of employees will increase from R690.4 billion in 2022/23 to R760.6bn in 2025/26.
It said in its Budget review document that the Budget was growing at an average annual rate of 33%, mainly due to the carry-through costs of the public service wage increase implemented in 2022/23.
“Some of the departments and entities, such as peace and security functions, have also allocated additional funding to strengthen their capacity to improve service delivery,” it said.
National Treasury said a public service agreement that exceeded the rate of growth of the compensation budget would require steps to contain overall compensation spending through stricter headcount management.
Godongwana said an unbudgeted wage settlement would require very significant trade-offs in government spending, because the wage bill was a significant cost driver.
“It will mean that funds must be clawed back in other ways. Mainly, this will mean restricting the ability of departments and entities to fill non-critical posts,” he said.
“It will also mean achieving cost-savings from major rationalisation of state entities and programmes,” the minister added.
Godongwana noted that the Budget provided for the carry-through costs of the 2022-23 wage increase.
He insisted that the Budget included pay progression, a housing allowance, and other benefits for public servants.
“The Budget also provides additional funding for safety and security, education and health.
In health, the funds are for hiring new staff, addressing shortfalls in compensation budgets, and retaining additional health workers appointed during the pandemic, as well as clearing the backlog in health services.”
The minister said the Treasury had already identified where large savings could be achieved.
“In this regard, during the upcoming financial year, National 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,” he said.
Treasury said together with the Department of Public Service and Administration and other departments it was conducting a review across government departments to propose a single remuneration framework aligned with the principle of fair, equitable, and sustainable remuneration in the public sector.
But this would exclude state-owned entities.
Cape Times