Public-sector wage bill out of control — Dlodlo

• Minister warns critical services are in danger • Salaries now represent 35% of expenditure

SA’s R587bn public-sector wage bill had shot through the ceiling and the government would have to cut back on critical services if it failed to rein in pay increases, Public Services and Administration Minister Ayanda Dlodlo said on Tuesday.

Salaries for public servants have been growing at rates higher than inflation and consumed 35% of expenditure in 2017, up from 32.9% in 2007.

In 2018, public servants are set to receive above-inflation wage increases of between 6% and 7%.

Although public-sector unions are yet to sign the agreement, the government can implement it unilaterally after 30 days. The Police and Prisons Civil Rights Union was the only union to sign the draft agreement on Monday.

Four other unions rejected the proposed agreement, while five are still consulting their members for mandates.

The government had budgeted 7.3% for wage hikes.

Business Day understands the only way the ceiling could have been contained was if organised labour and the employer agreed on pay increases based on the consumer price index.

About R1bn will be spent on the implementation of the delinking of the housing allowances for spouses.

Economists and ratings agencies have issued several warnings over the years about the country’s ballooning public wage bill.

The government has conceded on several occasions that spending on salaries for the 1.3million public servants had increasingly crowded out other areas of expenditure, “limiting government’s ability to improve the composition of spending in favour of capital budgets”.

The Treasury estimates that the consumer inflation rate will remain in the 5.3% to 5.5% band over the next three years.

The Reserve Bank’s monetary policy committee is expected to meet on Wednesday and Thursday to look at, among other things, interest rates.

Dlodlo told Business Day that the country’s future looked bleak if drastic measures were