Public sector wage bill ‘needs to be cut’
Faced with unsustainable debt and a ballooning deficit, the government has to bite the bullet and drastically slash the public-sector wage bill to reduce expenditure, the DA says.
FOR FAR TOO LONG GOVERNMENT HAS AVOIDED A DIFFICULT DISCUSSION WITH PUBLIC-SECTOR UNIONS ABOUT THE ... PUBLIC WAGE BILL
Faced with unsustainable debt and a ballooning deficit, the government has to bite the bullet and drastically slash the publicsector wage bill to reduce government expenditure, the DA has proposed.
The proposals were made at a media briefing to outline the DA’s view on what finance minister Tito Mboweni should announce when he tables his medium-term budget policy statement in parliament on Wednesday. The policy statement gives an update on the government’s economic growth target and debt level as well as estimates for the budget deficit over the next three years.
Bailouts for Eskom and stateowned enterprises have led to sharp rises in debt and the government’s interest bill while revenue lagged because of slow economic growth. The mediumterm budget is keenly awaited to see how the Treasury aims to arrest these worrying trends.
DA proposals include a R168bn cut in the public-sector wage bill over the next three years. It says this is the only option as the government has no more room to raise new revenue or new debt, and it would protect essential public services on which poor people rely.
The proposals would include a three-year wage freeze at 2019/2020 levels for all nonoccupation specific dispensation employees who represent 33.7% of public servants. These are managers and administrative staff which the DA says are bloated, overpaid and the beneficiaries of ANC patronage. This measure would yield R138.6bn.
Occupation-specific dispensation employees such as teachers, nurses, doctors and police officers, called frontline staff, would continue to get inflationlinked increases over the next three years. In addition the DA has proposed a hiring freeze and reduction in the number of head office management staff by about 9,200, saving R29.4bn over three years.
The government’s wage bill takes up 35% of total public spending, projected to grow from R585bn in 2018/2019 to R713bn in 2021/2022.
“This is simply not sustainable because the amount of money spent on salaries is crowding out productive investment,” said DA finance spokesperson Geordin HillLewis. He said Mboweni’s top priority should be “to present a credible plan to prevent a blowout of the deficit and to stabilise the national debt. This will require deep spending cuts.”
Mboweni and President Cyril Ramaphosa could no longer continue putting off the difficult decisions needed to turn around the economy, Hill-Lewis said. “For far too long government has avoided a difficult discussion with public-sector unions about the cost and composition of the public wage bill. It is time for decisive moral action in the interests of the country,” DA spokesperson on public service and administration Leon Schreiber said at the briefing.
The DA has also proposed eliminating New Development Bank funding to save R13.25bn over the next three years and eliminating the national health insurance funding to save R5.8bn over this period.
Additional revenue could be raised by auctioning digital spectrum for R32.5bn, selling Telkom shares for R14.5bn and selling Sentech for R1.8bn.
Implementing all these measures would keep the budget deficit at the 4.5% level estimated in the February budget.
DA deputy finance spokesperson Dion George also urged Mboweni to place the state-owned national airline SA Airways under business rescue and to shut down SA Express.
DA spokesperson on appropriations Ashor Sarupen said the government should stop the “immoral” bailout of failing stateowned entities at the expense of the public.