Reuters reports that the Treasury said on Friday that government was considering layoffs and early retirement packages for staff in the public sector to avoid breaking its pledge to cut spending.  

This followed a deal clinched with unions in May for above-inflation wage increases.  Salaries of public sector employees, including teachers, police and nurses, increased by up to 7% this year and will increase by 1% above inflation in the two years after that.  In its February budget when the Treasury outlined plans to reduce SA’s large debt pile to stave off ratings downgrades, it had planned for 4% wage increases.  The Treasury commented that the "government has indicated on several occasions that a wage agreement that departs significantly from inflation would need to be accommodated within announced expenditure limits, failing which such an outcome could have adverse consequences."  Specific details on the measures will be given at a later stage.

• Read this report in full at Engineering News

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