Cutting public-sector wages in a bid to appease rating agencies, Finance Minister Tito Mboweni on Wednesday delivered the 2020 Budget Speech in Parliament Cape Town.
Minister Mboweni stressed the need to reaffirm government’s commitment to close the gap between spending and revenue, implementing a plan for stronger economic growth and cooperation between government and the business sector. That should keep the rating agencies that want to downgrade SA’s debt position to junk status temporarily at bay.
In its Budget Review, Treasury has proposed cuts to the wage bill of R37.8 billion in 2020/21, R54.9 billion in 2021/22 and R67.5 billion in 2022/23.
The intervention comes as the state attempts to reduce high spending on salaries in the sector.
“Public servants do crucial work for our country, often in trying conditions. The governing party is a firm believer in the critical role of the state in development. For this reason, we need qualified, motivated and effective staff,” said the Minister.
Working with the public sector unions, government has over 15 years sought to improve the lot of public servants.
“We have committed significant resources for compensating them every year even as we have tried to increase their numbers in recognition of their demanding workloads,” he said.
Between 2006/07 and 2011/12, the state added about 190 000 employees. However, wages also increased significantly.
“To balance the books, we slowed hiring, and since 2011/12, the number of government employees has declined,” he said. “We cannot go on like this. Classroom sizes are growing, hospitals are getting fuller and our communities are becoming increasingly unsafe.”
He said once wage growth, corruption and wasteful expenditure was under control, government would focus its attention on hiring in important areas such as education, police, and health care.
“We can hire strategically and better match skills with opportunities,” he said.
Government has tabled an agenda item on the management of the public service wage bill at the Public Service Coordinating Bargaining Council.
“The focus is to discuss containment of costs in the final phase of implementation of the current wage agreement,” said the Minister.
Mboweni said government anticipates to save R37.8 billion in the next financial year.
Delivering the 2020 Budget speech on Wednesday, the Minister revealed that government’s total consolidated spending is expected to grow at an average annual rate of 5.1%, from R1.95 trillion in 2020/21 to R2.14 trillion in 2022/23.
“This is mainly due to mounting debt-service costs,” he said. “Non-interest spending declines on average over the MTEF in real terms.”
Mboweni said: “As a major step towards fiscal sustainability, today we announce a net downward adjustment to main budget non-interest expenditure of R156.1 billion over the next three years relative to the 2019 Budget projections.”
Source: SA Commercial Property News http://www.sacommercialpropnews.co.za/south-africa-economy/9201-2020-sa-budget-speech-highlights-by-minister-tito-mboweni.html