Re­trench­ments in public sec­tor?

Pretoria News Weekend - - NEWS -

THE gov­ern­ment is con­sid­er­ing lay-offs and early re­tire­ment pack­ages for staff in the public sec­tor to avoid break­ing its pledge to cut spend­ing af­ter unions clinched above-in­fla­tion wage in­creases, the Na­tional Trea­sury said yes­ter­day.

Un­der a deal reached in May, the gov­ern­ment will raise salaries of public sec­tor em­ploy­ees, in­clud­ing teach­ers, po­lice and nurses, by up to 7% this year and by 1% above in­fla­tion in the two years af­ter that.

While the in­crease is less than the 12% unions wanted, it was above the 4% the Trea­sury planned for in its Fe­bru­ary bud­get when it out­lined plans to re­duce the coun­try’s large debt pile to stave off rat­ings down­grades.

The Trea­sury said that the “gov­ern­ment has in­di­cated on sev­eral oc­ca­sions that a wage agree­ment that de­parts sig­nif­i­cantly from in­fla­tion would need to be ac­com­mo­dated within an­nounced ex­pen­di­ture lim­its, fail­ing which such an out­come could have ad­verse con­se­quences”.

Spe­cific de­tails on the mea­sures would be given at a later stage, the Trea­sury said.

South Africa’s bud­get deficit and public debt bal­looned while eco­nomic growth slowed to a near stand­still in the nine years un­der for­mer pres­i­dent Ja­cob Zuma.

Pres­i­dent Cyril Ramaphosa promised to im­ple­ment wide rang­ing re­forms af­ter be­ing elected in Fe­bru­ary to try to kick­start eco­nomic re­cov­ery.

The coun­try nar­rowly es­caped a rat­ings down­grade to full-blown junk sta­tus by S&P Global Rat­ings Moody’s and Fitch Rat­ings, which kept the credit scores un­changed in re­views re­leased in March and June this year. – Reuters

A wage agree­ment that de­parts sig­nif­i­cantly from in­fla­tion would need to be ac­com­mo­dated within an­nounced ex­pen­di­ture lim­its

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