#MTBPS2015: Nene warns of cost of public service wage deal

#MTBPS2015: Nene warns of cost of public service wage deal

This year’s public service wage deal will see National Treasury allocate an additional R1.2 billion to cover increases, and will have a negative impact on public finances, Finances Minister Nhlanhla Nene said in his medium-term budget policy statement on Wednesday.

Nhlanhla Nene in Parliament
Gallo Images

“National Treasury will work with national and provincial departments to avoid any compromises on service delivery, or the diversion of resources from capital budgets to pay for compensation,” he said.

“Nevertheless, it is likely that the agreement will have adverse consequences for the quality and composition of the public finances.”

The final wage settlement will increase the salaries and benefits of public servants by 10.1 percent in the current year.

Nene warned that the country could not sustain increases of this magnitude, unless they were accompanied by an improvement in performance of the public sector.

“Without corresponding improvements in the quality of public services, increases of this kind are not sustainable over the long term.”

He said the increase was somewhat offset by the fact that the number of staff on the state’s payroll had declined in the past three years, but added: “Nonetheless, departments will need to reallocate spending away from existing priorities.” - ANA

(File photo: Gallo Images)

Show's Stories