Budget 2021

Public service wage approach must be more creative, Mboweni says

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Minister of Finance Tito Mboweni defended himself from any preemptive backlash from organised labour over his unapologetic stance regarding how government manages the public service and its wage bill.

Mboweni tabled his first medium term budget policy statement in Parliament on Wednesday afternoon.

Mboweni’s remarks come at a time when government, through the Department of Public Service and Administration, is grappling with unions in the public service sector over wage increases and fears from unions that government may consider retrenchments in the public service.

Mboweni made no bones of the risk that the public service wage costs posed to the fiscus, putting the challenge in the same league as beleaguered state-owned entities and debt.

Speaking to reporters during a press briefing after the medium-term budget policy statement was tabled, Mboweni said his track record as a former minister of labour would hold him in good stead when managing the dynamics between fiscal imperatives and labour interests.

“I was minister of labour before, participating in the drafting of post-apartheid labour laws. Some have said those laws would come back to bite me, but I maintain that they are good labour laws. Ministers responsible will initiate conversation to carry the process forward,” said Mboweni.

Mboweni encouraged unions to familiarise themselves with the predicament that government found itself in. He said unions would also do well to understand that the public service has been relatively kind to employees.

“The law of the land should be commonly understood. Employers and employees should take the time to understand the nature of the beast. They must then decide what to do and when they both know where they stand, a proper conversation can start,” Mboweni said.

He said government must be more innovative in its approach to the public wage challenge. He even mused that performance evaluation may be introduced to determine each employee’s compensation instead of giving all public servants an automatic thirteenth cheque.

“The headline is the wage bill, what drives it and how to reduce it. Reducing it does not necessarily mean retrenchments. The Minister of Public Service is better placed to talk about this. But I know that there is a problem with the wage bill and we need to find money from budgets,” he said.

Between 2006-07 and 2017-18, compensation spending on the main budget more than tripled from R154bn to R480bn. Inflation accounts for just over 40% of the increase in compensation spending. The rest of the increase stems from a rise in employment and above inflation increases in remuneration. 

* Visit Fin24's 2018 mini budget hub for all the news, views and analysis.

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