/ 1 November 2019

Tito has state’s wage bill in his cross hairs

Tito has state’s wage bill in his cross hairs
Tito Mboweni said the government still needed to discuss these and other solutions with labour. An update will be announced in the 2020 budget.(Sumaya Hisham/ Reuters)



The government needs to trim the earnings of its highest-paid employees, said Finance Minister Tito Mboweni, who sees a reduced wage bill as a key reform to get the state’s finances back in order.

The proposals to address the problem would cut the public sector wage bill — which accounts for 35% of the consolidated national budget.

The minister said 29 000 public servants — including members of the national executive, MPs and MECs — each earned more than R1-million a year.

“After adjusting for inflation, this is more than double the number of civil servants earning more than R1-million in 2006-07.”

Salaries for civil servants have grown by about 40% in real terms over the past decade. The spending in this area has been driven by real increases in wages and benefits rather than higher employment levels.

The treasury’s policy paper shows that the number of government employees peaked in 2012-2013 but has since declined by 1.4%. On average “between 2006-07 and 2011-12 every public-service employee who left was replaced by 1.6 employees. But, since 2012-13, more people have left the public service than have been hired.”

The minister said the average wage increase across government was 6.8% in 2018-2019, adding that after adjusting for inflation the average government wage has risen by 66% in the past 10 years.

In a media briefing before delivering the medium-term budget on Wednesday, Mboweni blamed the increase in the public sector wage bill on former public service and administration minister Faith Muthambi and former minister of co-operative governance and traditional affairs Richard Baloyi, who signed agreements that were “outside their mandates”.

“One of them has been made ambassador … this is unbelievable and we must call a spade a spade and not a big spoon,” he said.

In a statement released on Thursday, Muthambi said the minister’s remarks about her are untrue. “Mboweni must stop his verbal diarrhea and being hellbent on playing the blame games and start applying his mind on how he can better contribute positively to South Africa than boosting his pompous ego any further,” the statement said.

As a means to narrow the wage bill, the medium-term budget policy statement will consider “pegging cost-of-living adjustments [on yearly salary increases] at or below consumer price index inflation, halting automatic pay progression and reviewing occupation-specific dispensations for wages”.

Mboweni said the government still needed to discuss these and other solutions with labour. An update will be announced in the 2020 budget.

He said future salaries of Cabinet ministers, premiers and MECs could be adjusted downwards.

The cost of official cars will be capped at R700 000, value-added tax inclusive; a new cellphone dispensation will cap the amount claimable from the state; subsistence and travel allowances for domestic and international trips will be scrapped and all domestic travel will be on economy class tickets.

In the February budget, the minister announced similar measures such as early retirement without penalties, such as a reduction in the pension fund payout.

The cut was supposed to save R12-billion but this number has since been revised

Other measures announced in February included reducing performance bonuses and freezing the salaries of MPs and MECs.

“Early retirement savings are coming through slower than we originally thought. We will reinvigorate the early retirement programme,” he said.

Tshegofatso Mathe is an Adamela Trust business reporter at the M&G