We will target the growth of wages in public sector, not jobs – Ramaphosa

Cost-cutting, not job cutting. This was the gist of President Cyril Ramaphosa’s message to the country on Monday morning. Picture: iStock/Gallo Images
Cost-cutting, not job cutting. This was the gist of President Cyril Ramaphosa’s message to the country on Monday morning. Picture: iStock/Gallo Images

President Cyril Ramaphosa has moved to allay fears about job losses in the public sector following Finance Minister Tito Mboweni’s budget speech last week.

Ramaphosa said the approach was not to dramatically cut the size of the public service, but to examine the rate at which wages grow.

“Public service wages have on average increased at a much higher rate than inflation over many years, and we need to fix this if we are to get public finances under control,” he said.

“The wage bill remains the largest component of spending by economic classification. Growth in the wage bill has begun crowding out spending on capital projects for future growth and items that are critical for service delivery,” he said.

Ramaphosa, in his letter to the nation on Monday, added that there will be no increase in the salaries of senior public office bearers this year.

“This follows a reduction in benefits stemming from changes to the ministerial handbook,” he said.

An austerity budget would have damaged our growth prospects and weakened the ability of the state to stimulate economic activity and meet people’s needs.

A new law was on the cards, and this would introduce a remuneration framework for public entities and state-owned companies to prevent excessive pay for board members and executives.

“As much as containing the public wage bill is critical to stabilising public finances, improving public sector performance is imperative if we want to build a more capable, efficient state. We need more of the right people in the right positions,” Ramaphosa said.

While the state focused on fixing public finances to make inclusive growth and job creation possible, he called on South Africans to be “realistic, not dogmatic”.

“Compromises and trade-offs will have to be made.”

He called the budget a sobering assessment of the state of the economy, and repeated his words from his state of the nation address that “unless we act now to turn things around, there will be even more difficult times ahead”.

Ramaphosa said the decision not to pursue a path of austerity was deliberate.

“Such a route would have seen deep cuts in spending on the social services that poor people rely on,” he said.

It could have involved dramatically reducing the salaries of civil servants, the size of the public service, cutting bonuses and pensions, raising taxes and selling off key state assets.

“An austerity budget would have damaged our growth prospects and weakened the ability of the state to stimulate economic activity and meet people’s needs,” he said.

“We have instead presented a budget that contains a range of balanced and well-considered measures to contain spending, increase revenue and encourage growth.”


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