Budget 2021

State workers could face voluntary severance packages

Pretoria – Headcount in South Africa’s public service has stabilised but government is considering introducing voluntary severance packages to help keep a lid on its wage bill.

This is outlined in Treasury’s 2017 Budget Review, which was published on Wednesday as part of Finance Minister Pravin Gordhan’s Budget Speech.

Government’s headcount in the public service has levelled out, relieving some of the upward pressure on the wage bill, Treasury said in the review.

“Headcount in the public service has stabilised at about 1.32m staff,” said Treasury.

“Although some national departments are struggling to maintain their personnel budget limits, preliminary indications are that most are on track to stay within compensation ceilings.

“Provinces continue to make progress in containing staff headcount, which has declined by 2.8% since the beginning of 2016/17. The proportion of provincial budgets spent on personnel has declined from 60.4 % in 2015/16 to 59.8% in 2016/17,” Treasury added.

Keeping control over headcount fits into Treasury’s plan to ensure government adheres to the spending ceiling, which was established in 2012.

Treasury also explained that between 2008/09 and 2015/16, national and provincial government salaries rose about 1.8 % faster than inflation.

“In total, salaries have nearly doubled, compared with an increase in the consumer price index of about 70%. Public-service wage settlements generally provide for increases equal to inflation, plus a premium that is not linked to performance.

Treasury added that government has “withdrawn nearly all identified funding for vacant posts and blocked appointments to non-critical vacant posts on the payroll system, pending the submission of revised human resource plans by departments”.

During 2016, national departments were also required to develop and submit human resource budget plans to the Medium-term Expenditure Committee (MTEC), said Treasury.

Further to these measures, government job cuts could also be on the cards in the form of voluntary severance packages.

“The National Treasury and the Department of Public Service and Administration are working with departments to reduce headcount, including testing the idea of voluntary severance packages,” said Treasury.

Managing the public sector wage bill also forms part of government’s efforts to ensure that its fiscal policy is focused on containing the budget deficit and slowing the pace of debt accumulation, said Treasury.

Treasury said that despite forecast revenue under-performance, the main budget primary deficit – which is a key measure of fiscal sustainability – will halve from 1% of GDP in 2015/16 to 0.5% of GDP by the end of 2016/17.

* Visit our Budget Special for all the budget news and in-depth analysis.

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