Finance Minister Enoch Godongwana presented the 2024 Medium-Term Budget Policy Statement to Parliament yesterday. Photographer: Armand Hough / Independent Newspapers
The government is set to collide with public-sector workers’ unions in the months ahead following the proposal for an early retirement of at least 30 000 employees in a bid for the State to reduce its wage bill.
The National Treasury yesterday announced that the government has allocated R11 billion to implement early retirement measures over the next two fiscal years in a bid to contain the escalating wage bill.
This is contained in the documents of the Treasury’s 2024 Medium-Term Budget Policy Statement (MTBPS) tabled in Parliament by Finance Minister Enoch Godongwana yesterday.
The MTBPS documents state that Cabinet has approved an early retirement programme to reduce government employment costs while retaining critical skills and promoting the entry of younger talent into the public service.
Treasury said the government was proposing to reactivate early retirement without penalties in 2025/26 and 2026/27 in a bid to further contain public service wage costs amid a deteriorating fiscus.
“To support this initiative, an additional R11bn will be allocated over the next two fiscal years. Details will be set out in the 2025 Budget,” stated the budget documents.
“Accounting officers and executive authorities will have the authority to approve early retirement applications that do not reduce the pool of highly skilled individuals within government agencies.”
South Africa’s average spending on public-sector salaries is well above that of many countries, with the general government wage bill constituting 13.6% of the GDP in 2022 - the third highest in the world after Iceland and Denmark, according to the OECD - while the general government employment was the seventh at 18.6%.
Treasury’s Director-General, Dr Duncan Pieterse, said the reduction of the government employees headcount will eventually save the fiscus around R2bn annually.
“The number of employees that have been provisionally used in order to inform the numbers is 30 000 over the next two years. But it’s important to note that this is a voluntary program, so employees have to opt-in and the executive authorities have to approve. So it’s very difficult to say exactly what the outcome will be,” Pieterse said.
“And, of course, the Department of Public Service and Administration will have to release the directive for early retirement in the next few weeks to give effect to this.”
Over the past decade, the wage bill has decreased as a share of consolidated spending, falling from 35.7% in 2013/14 to 32.1% in 2023/24.
By 2027/28, the wage bill is projected to decrease to 31.4% of consolidated spending.
Godongwana said this was a early retirement proposal was a measure to build a capable State that delivers a reasonable and reliable standard of public service that will foster the necessary environment for more growth and jobs.
“We are also implementing initiatives like early retirement, not to merely reduce the size of the workforce, but also to introduce younger talent to the public service,” Godongwana said.
“This is part of building a capable, ethical and developmental government. We will be harnessing digital infrastructure to roll out critical systems in the provision of service delivery in the following focus areas: digitising and simplifying the application and disbursement process for social grants; broadening access to employment pathways; rolling out digital identification documents; building a centralised and accessible website for all government services; and digitising health records management for the rollout of National Health Insurance.”
BUSINESS REPORT