Business Report writes that the government will be tightening its belt further this financial year, with downward risks to the fiscus having materialised after it lost a bruising battle with labour unions over wage increases.
Last week, the National Treasury confirmed to Parliament that the recently signed wage agreement with 1.2 million public servants would cost the fiscus R20 billion in the 2021/22 fiscal year. Treasury director-general Dondo Mogajane said the wage agreement would have an impact on the fiscus, because it was over and above the compensation ceilings that had been tabled in February. The government's wage bill accounts for about a third of consolidated spending. “The risks have finally materialised now. It's not ideal to not give inflation-linked increases, but the reality is that we have come to that conclusion exactly because of this,” Mogajane said. He indicated that options and recommendations would be discussed by the ministers' committee on the budget and the Cabinet. After months of deadlocked negotiations, the government and public sector workers last month struck a one-year deal for a 1.5% salary increase, plus a cash payment. Workers' unions had been pushing for above-inflation increments, while the government wanted to freeze salary increases for the next three years to keep the budget deficit in check. Treasury's presentation showed that the main budget deficit was worse than expected by R183.9bn. Mogajane said they would continue on a path of fiscal consolidation while providing continued support to the economy and public health services in the short term. But Cosatu spokesperson Sizwe Pamla commented: “The source of the macroeconomic quagmire is stagnation and not debt. Therefore, rather than choking the economy with austerity measures, the government needs to implement policies that support economic growth.”
- Read the full original of the report in the above regard by Siphelele Dludla at Business Report
- Read too, Government dragged to court to honour its word, on page 5 of Sunday Independent of 29 August 2021
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