In its medium-term budget statement (MTBPS) on Wednesday (October 28th), Mboweni said the national finance ministry would propose a three-year wage freeze to stabilize the spiral wage bill in the public sector. The report also found that wage costs in the country are higher than the global standard as a percentage of GDP, government spending or tax revenues. „They intend to reduce R60 billion in 2021/22, R90 billion in 2022/23 and R150 billion in 2023/24 on the public sector payroll, and they have already started with the R37 billion of the last stage of the 2018 wage agreement.“ However, the measure is expected to face greater opposition from the country`s unions after the government signed a collective agreement in 2018 guaranteeing significant increases to the country`s public employees. Shingange added that city councils, municipal officials and heads of state agencies received wage increases that were funded by the same government, which then reversed them, saying the public service payroll was too high. Wage increases from 2006 to 2019 exceeded the rate of growth and productivity. The increase in public sector wages as a percentage of tax revenues rose from 31% before the global financial crisis to 41% in 2009/2010 and stabilized at about 37%. The percentage exceeds 50% of sales this year and will be 47% next year and 45% in 2022-23,“ according to the report. „Other options to be considered include harmonizing allowances and benefits available to public officials, revising rules on wage growth and revising occupational exemptions.“ The rapid increase in wages, combined with an increase in the number of employees, has increased the government`s payroll by 50% since 2008. The government has not implemented the third year of the 2018 collective agreement, the case is currently being considered by the labour court. The Ministry of Finance said the government was actively cooperating with unions to find a solution to more sustainable employment costs. The State Ministry of Finance confirmed its decision to freeze the salaries of civil servants in the country, with data showing that state pay has soared over the past 15 years.
According to Shingange, during Finance Minister Tito Mboweni`s budget speech in February, unions rebuked the government`s want to reduce the public service payroll of R160 billion, that the step would be ruthless, insensitive, clumsy and assimilated to declare war on workers. „Since 2006/2007, average public service compensation has grown faster than GDP per capita and is now 4.7 times higher – partly the result of slow economic growth and high unemployment,“ he said. He said that the government is behaving as if its negotiators were not in possession of their capabilities or that someone had put a gun to their heads when the agreement was signed. However, since 2004, this relationship has been reversed and the ratio of offset spending to GDP has risen to about 11%, he said. Public sector unions affiliated with Cosatu and the Federation of SA Trade Unions have declared war on the government for their failure to implement collective agreements, including raising the salaries of their employees this year. But the Finance Ministry also warns of tax risks – including stagnant economic growth, public sector union disputes over the wage contract and new wage negotiations, and SOEs and municipalities that do not have enough money to cover operating costs.