Budget 2022

Reducing public servant headcount will compromise service delivery, MPs hear


Reducing the staff in public service through an early retirement package option could compromise service delivery, members of Parliament have heard.

The Standing Committee on Finance on Wednesday held public hearings on the National Budget. Among the concerns raised by research groups and trade unions was interventions on the public service wage bill.

According to the National Budget document, in an effort to shrink the state's wage bill, government is targeting 16 000 to 30 000 employees over the next three years to take early retirement, without incurring penalties.

The public wage bill accounts for 35% of government spend. The Congress of South African Trade Unions (Cosatu) deputy parliamentary coordinator Tony Ehrenreich said this was a stable level, in line with international norms.

He also noted that the headcount was falling by 1% per annum. Cosatu is concerned that the effect of reducing staff in the public service would have a "huge impact" on service delivery, Ehrenreich said.

"While we see staff being cut, we see management positions being increased," he said.

Instead Cosatu would want to see the size of Cabinet being reduced, as well as the size of mayoral committees. Cosatu also wants perks for politicians to be cut, and a salary cap or freeze to be placed on management of state-owned enterprises. "It is unacceptable, the huge salaries that some CEOs of SOEs earn."

Austerity measures

Daniel McLaren, who represented the Budget Justice Coalition at the public hearing, expressed views that over the past five years Treasury had opted for a fiscal policy with austerity measures, which is regressive.

Austerity measures have been reflected in that non-interest expenditure, had not increased in line with revenue growth. Resources have been used to pay off debt servicing costs as opposed to non-interest expenditure such as the public sector wage, he explained. "This is the essence of austerity policy," he said.

These austerity measures can be felt in the declining capacity of government departments, McLaren said.

For example, government's intentions to reduce the size of the civil service, is not to improve efficiency, capacity or performance of departments but rather to reduce operational costs. This cost-cutting policy has left provincial departments understaffed, with consequences for critical departments like health and education, he explained.

"It's affecting capacity at a time when we need all hands on deck to deal with various socio-economic issues."

The Budget Justice Coalition, in its written submission, suggests that the worsened performance of government would lead to the re-hiring of lost experience through consultants, which will further undermine its capacity and expose the state to more corruption and looting.

The Budget Justice Coalition proposes that government should adopt a macroeconomic policy supportive of economic growth that stimulates job creation. The coalition also recommends a fiscal policy which sees increased funding in social expenditure and manages rising inequality, McLaren told the committee.

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