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Government may hike public sector pay in quest for votes

Details

southafricalogoBL Premium reports that in an economic research report released on Monday, Absa said that unprecedented electoral pressure on the ANC would seem to “raise the risk of populist policies” and force the government to grant an amended public sector pay hike.

Finance minister Enoch Godongwana pencilled in a 3% increase for public sector wages in the medium-term budget statement policy in October. “We believe the government will have to concede a public sector wage hike in the 2023/2024 financial year that offers a degree of catch-up after the government unilaterally imposed a 3% wage settlement for the current fiscal year,” Absa chief economist Peter Worthington opined. “In contrast to the MTBPS’s unrealistic assumptions ... we have conservatively pencilled in a 5.5% all-in rise in public sector pay,” Worthington indicated. Even though SA’s fiscal position has improved over the past few years, analysts warn that there is likely to be slippage on the wage bill, which will in turn increase the deficit. The dissatisfaction with the ANC and the government’s handling of load-shedding, which has manifested in increased protests and the launch of legal action against the government over power supply, is mounting and could further weigh on its political support. Worthington said that the unprecedented electoral pressure on the ANC was evidenced by President Cyril Ramaphosa’s recent statement that he had asked Eskom not to implement the regulator’s approved tariff increase for the utility. “He later had to walk back from that when it was pointed out that such a step would be illegal,” Worthington noted. According to Gianmarco Capati of Fitch Solutions, “the ANC-led government will probably push to increase wages by something closer to inflation which we see averaging 5.5% in 2023”.

  • Read the full original of the report in the above regard by Thuletho Zwane at BusinessLive (subscriber access only)


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