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Columnist Hilary Joffe writes that over the past three years the government has firmly bent the curve on public sector pay, halting a decade-long trend of above-inflation wage increases.
The new two-year wage settlement between the government and a majority of public sector trade unions seems set to continue that trend. But it would add R35bn-R40bn of unbudgeted government spending over the next three years. The settlement provides for a 7.5% increase in the present fiscal year, followed by an increase in line with consumer price inflation (as projected by the Treasury) for the next year, 2024/25. But this year’s increase is really 3.3% rather than 7.5%. That’s because it includes the R1,000 a month after tax cash gratuity public sector workers were granted in 2021, and again in 2022, which was due to fall away once a new wage settlement was reached. So the increase for the first year is not that far above the 1.6% the Treasury had pencilled in. It’s also below the projected inflation rate of over 5.3%. The big question is whether the Treasury allocates new money to fund the extra spending, or requires departments to find the money – by shedding staff or reallocating money within existing budgets, or cutting whole programmes. Another big issue is who gets the money within the public service – and the dynamic there, essentially, is that the increases have gone largely to junior and middle grades, at the expense of senior management and supervisory skills. Joffe opines that this year’s settlement will build on the shift to moderation of the past three years and may not prove as much of a risk to the budget framework as many in the market have feared. But it will do nothing for the quality of the public service unless it addresses the broader trade-offs.
- Read the full original of Hilary Joffe’s column at BusinessLive (subscriber access only)
Get other news reports at the SA Labour News home page