The National Treasury says if the government loses the case over public sector salary increases, it will have to shift funds from infrastructure and this will have a devastating impact on the country’s economic recovery plans.

The Treasury says this year’s wage bill cost is R640 billion which is a major risk to the fiscal framework.

Both government and workers’ unions are awaiting the outcome of a Constitutional Court ruling on the public sector salary bill.

Chief Director at National Treasury, Edgar Sishi says, “We only collected R1.2 trillion in taxes which means that the tax revenue of the government is already going towards paying wages which is why we are fighting to control the wage bill. However, if we are forced to do it and we don’t succeed what this will mean is that, that infrastructure money will have to be shifted towards wages and that will hurt our ability to achieve the economic recovery plans.”

Unions opposed to adjustments to public sector wage bill agreement:

Government employees to receive marginal salary increment

The budget recommends growth in the wage bill by an average of 1.2%. The share of public-service wages sits at about 47% of government revenue in the 2020/21 financial year.

Government has warned that a departure from this in the forthcoming wage agreement would not be affordable and would compromise debt stabilisation.

Finance Minister Tito Mboweni said public service wage negotiations are already under way.

Mboweni said, “The Minister of the Department of Public Service and Administration Senzo Mchunu is working with our partners in organised labour to achieve a fair public sector conversation dispensation. When negotiations resume, following new multi-year settlements later this year, I know there are some, when they are not aware that conversations are taking place, they say that we are not telling the truth when we say that conversations are taking place. When you are not aware it doesn’t mean it’s not happening.”

Medium term spending plans and job creation.

Minister Senzo Mchunu is working with our partners in organised labour to achieve a fair public-sector compensation dispensation when negotiations on a new
multi-year wage settlement begin later this year. #RSABudget2021

— South African Government (@GovernmentZA) February 24, 2021

VIDEO, Budget 2021 delivered by Minister of Finance Tito Mboweni