Co-director of the Institute for Economic Justice Neil Coleman has described government’s plan to cut the public sector wage bill as an attempt to pacify the rating agencies.

Neil says policy-makers must identify what he terms the real problems in the public service.

“We have a dysfunctional strategy that is not thinking through these decisions and is being very short-term in their approach. In a way, the only hope is that generating this crisis is going to be a situation in which policy-makers are forced to engage in realistic alternatives to begin to get the wheels of the economy moving.”

In an interview with Morning Live, Neil Coleman discusses the decision to curb the rate at which public sector wages are growing. 

Budget deficit projected at 6.8%

Presenting the 2020 budget to Parliament, last week, Finance Minister Tito Mboweni said the government would decrease its wage bill by about R160 billion over the medium-term.

He defended that this was part of the efforts to lower spending and narrow a budget deficit projected at 6.8% of gross domestic product for the 2020/21 financial year.

In the video below, Tito Mboweni delivered his 2020 Budget Speech 

Cosatu rejects wage bill proposal 

The budget received a mixed reaction from various sectors of society. Labour union, Cosatu describing it as provocative and the plans to curb the civil service wage bill an unwarranted attack on workers. While NGO Section 27 said the 2020 budget proposals risk to further harm the economy by slashing funding for socio-economic development.

The Congress of South African Trade Unions has rejected Mboweni’s proposal to cut the public sector wage bill by over R160-billion.