Business Day

Public sector wage bill ‘needs to be cut’

- Linda Ensor Parliament­ary Writer ensorl@businessli­ve.co.za

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.

 ?? /Reuters ?? Frontline staff: While calling for cuts in the public sector’s wage bill, the DA wants the police, nurses, doctors and teachers to continue to get inflation-linked pay increases over the next three years.
/Reuters Frontline staff: While calling for cuts in the public sector’s wage bill, the DA wants the police, nurses, doctors and teachers to continue to get inflation-linked pay increases over the next three years.

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