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Fin24 reports that the National Treasury has pledged fiscal discipline and a commitment to reducing the fiscal deficit in the light of the final settlement on wages for public servants on Friday.
A narrow majority of trade unions in the Public Sector Co-ordinating Bargaining Chamber (PSCBC) signed the wage offer of 7.5% for 2023/24 and a CPI-linked wage increase for 2024/25, putting increases in place for the start of the new financial year on 1 April. The April increase includes an average 4.2% increase, from incorporating the R1,000 after-tax cash gratuity of the last two years into the pensionable salary, plus a 3.3% cost-of-living adjustment. Incorporating the R1,000 gratuity into the baseline will mean increases well above 7.5% for lower-paid workers. The agreement will cost the government R37.4 billion in 2023/24, with carry-through effects applicable for subsequent financial years. In a statement on Friday, the Treasury pledged its commitment to fiscal consolidation, emphasising that where wage increases were "unaffordable", significant trade-offs in the short and medium-term would need to be made. In a statement it indicated: “Government remains committed to reducing the fiscal deficit to more sustainable levels (i.e. stabilising debt). Therefore, the government will initiate processes to ensure that the latest wage agreement is implemented through significant tradeoffs in the short and medium-term. Moreover, the National Treasury reiterates the position that government borrowings will not be increased for the purposes of consumption expenditure, including paying for wages.” The tradeoffs will include restrictions on recruitment of non-critical posts, restricting previously-planned recruitment in certain areas and reducing out-of-line remuneration in public entities. The last point is particularly sore among unions, which are angry about the excessive salaries paid by state-owned entities and agencies.
- Read the full original of the report in the above regard by Carol Paton at Fin24
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