Mboweni warns against rising wage bill in government

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Finance minister Tito Mboweni has issued a stern warning on the rising wage bill in government. Speaking during the Medium Term Budget Policy statement in Cape Town, Mboweni warned that risks which were identified by his predecessors have come to reality. Part of which was a public-service wage agreement that was significantly above inflation.

The Minister highlighted that because of this mere factor the fiscus cannot offer much more funding directed towards wages.

“ The 2018 public-service wage agreement exceeds budgeted baselines by about R30.2 billion over the medium term. We have not allocated additional money for this. National and provincial departments will be expected to absorb these costs within their compensation baselines,” says the minister.

Mboweni’s comments on governments wage bill come as there have been numerous reports that government looks to shed at least 30 000 works from public office.

Government’s compensation bill accounts for about 35% of consolidated expenditure, and forms the major driver of spending pressures.

“The wage bill remains the biggest cost pressure on the budget…Around 85 % of the increase in the wage bill is due to higher wages, rather than headcount increases. The national wage ceilings remain unchanged, despite the new wage agreement. “

The Minister highlighted that tough decisions must be made to reduce the structural deficit, especially the consistently high growth in the real public sector wage bill. He added that New fiscal anchors may be required to ensure sustainability.

The wage bill in South Africa has increased significantly over the past few years, rising from R 395 billion in 2014/15 to R490 billion 2017/18.

Mboweni’s comments come as numerous calls have been made for president Ramaphosa to cut down on the number of his cabinet. This a feat that Mboweni agrees is possible and the likely hood is that South Africa can have a cabinet of just 20 ministers.