Health and social services got large allowances, but Gordhan also forked out for teaching wages.
Health, education and social services will continue to receive the largest chunk of the national purse, according to the national treasury's medium-term policy statement.
However, increases in the budgets of basic and higher education largely reflect an attempt to keep up with increasing salary costs.
The budgets of the health and social development departments have been adjusted downwards in the second half of the financial year.
Funds were taken from conditional grants in education, such as the conditional infrastructure grant, to make up for "unforeseen" salary hikes.
Finance Minister Pravin Gordhan said spending growth on wages and goods and services needed to be contained to stablise debt and rebuild fiscal space.
Over the longer term, basic education and health budgets are expected to continue to grow yearly, mainly because of additional salary requirements.
On average, spending on employee compensation accounts for 61% of the money allocated to education.
Over the past eight years, more than 250 000 personnel have been added to national and provincial government payrolls. The largest increases have been in education, healthcare and criminal justice.
"While most of the new positions were created for teachers, nurses and police officers, there is concern about the growth of managerial and administrative staffing across government," the treasury said.
"Personnel intensive" departments and "priority areas" were accommodated by moderating funding in other groups.
But the treasury said a general trend towards gradually increasing social services budgets yearly would continue. This, together with narrowing the deficit, was vital to long-term sustainability.
By 2016, the education budget will have increased by an average of 7% a year. Employment and social security is the "fastest growing function", Gordhan said, increasing by 14% to R75-billion in 2016. The community work programme is expected to be operational in municipalities by then.
During the budget presentation in February, the treasury said the social services sector's total budget remained at about 7.8% of gross domestic product (GDP).
Talks to manage labour unrest
These sectors would be strengthened along with the labour and mining industries, where "wide-ranging" talks in the mining sector were under way to manage labour unrest.
The human settlements development grant will also receive new allocations to speed up the upgrading of informal settlements in mushrooming mining towns.
But the treasury tread carefully on the issue of the youth wage subsidy. The medium-term budget statement read: "An employment incentive proposal has been tabled to encourage youth employment and share the costs of job creation in special economic zones and targeted industries. This measure is expected to support about 200 000 jobs over the next three years."
More broadly, on jobs, the treasury said GDP growth was expected to recover over the next three years to reach 3.5% in 2016.
Employment is expected to grow by 1.7% a year on this trajectory. But this is an insufficient growth path to reduce joblessness, government said.
To grow the economy, initiatives are under way to strengthen higher education and expand access to student finance. One of these initiatives is tax allowances for scholarships.
Providing social services
Provision of social services like health and education are in the domain of the provinces, and additional resources and conditional grants for provincial departments were announced on October 23.
This included an increase in provincial budget allocations, which were driven by higher wage costs for the 900 000 public servants employed mainly in health and education.
In higher education and further training colleges, "higher than expected" wages had necessitated adjusting budgets upwards. An additional R12-million has been allocated to mitigate the cost of higher salaries in the sector.
Over the medium term, provincial baseline allocations will increase by a net amount of R11.2-billion. This increase is funded through drawdowns in the contingency reserve and a reallocation of national resources, the treasury said.
A new conditional grant will fund categories of therapists in education for the next two years, while over the next three years additions to the provincial equitable share will fund shelters for abuse victims and the rollout of a new vaccine for the human papilloma virus.
To finance additional wage demands, the school infrastructure backlog and education infrastructure grants will be "trimmed" over the longer term.
Grants continue to grow
However, these grants will continue to grow "strongly" over the spending period. An additional R374-million has been allocated to provide broadband connectivity to public schools.
The health department's budget was adjusted downwards. Its expenditure in the first quarter of this financial year was more than the same period in the previous financial year, largely due to arrears on rental payments for the 2011-2012 financial year.
The adjustment reflected R10.9-million reallocated for transfers to the South African National Aids Council due to difficulties experienced in processing the payment before the end of the 2012-2013 financial year.
The Walter Sisulu University will receive R4-million, also due to unprocessed payments from the previous financial year.
R1-million has been transferred from the department of health to the department of international relations and co-operation for a donation to Palestine for humanitarian assistance.
The department of social development's budget was also adjusted downwards overall, although an additional R20-million has been allocated to improve awareness about substance abuse.
Funds initially allocated to nongovernmental organisations, unspent due to delays in the finalisation of contracts, will be moved to the compensation of employees.
About R2-billion in unspent funds for social grants has been declared by the South African Social Security Agency due to the re-registration process of social grant beneficiaries.