Reuters reports that National Treasury advised on Wednesday that the wage agreement between the government and civil servants for the 2021/22 fiscal year will cost about R20 billion.

Last month after several months of negotiations, the government and public sector employees struck a one-year deal for a 1.5% salary increase plus a cash payment. Trade unions had initially demanded far larger above-inflation increases. The government wanted to keep salaries flat to rein in a gaping budget deficit exacerbated by the Covid-19 pandemic. But when talks reached a deadlock and unions threatened strike action, the government softened its position. National Treasury said in a presentation before a parliamentary committee that the R20 billion cost was above the compensation ceiling contained in this year’s February budget. “Work is ongoing on how to address the wage agreement within the current constrained environment,” the presentation indicated. The government’s wage bill, accounting for about a third of consolidated spending, has been a major concern for credit-rating agencies, which have downgraded SA’s sovereign debt to “junk” status.

• Read the original of the short report in the above regard by Alexander Winning at Moneyweb

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