R11 billion allocated for early retirement for civil servants

The National Treasury has allocated R11 billion for the next two years for voluntary early retirement by civil servants wishing to exit the public service in an attempt to reduce the public sector wage bill.

This was revealed in the 2024 Medium-Term Budget Policy Statement tabled by Finance Minister Enoch Godongwana in Parliament on Wednesday.

According to the National Treasury, improving the structure and organisation of the state was a key policy objective.

“South Africa’s average spending on public sector salaries is well above that of many countries,” the MTBPS document noted.

It said the Cabinet has approved the early retirement programme to reduce government employment costs while retaining critical skills and promoting the entry of younger talent into the public service.

“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.”

The National Treasury said R11 billion will be allocated to implement early retirement without penalties.

“Details will be set out in the 2025 budget.”

National Treasury director-general Duncan Pieterse said at least R2 billion a year was expected to be saved from the early retirement programme.

“The number of employees provisioned to inform (R2 billion) is 30 000 over the next two years. This is a voluntary programme,” Pieterse said.

He also said the Department of Public Service and Administration will issue directives to give to the planned voluntary early retirement programme.

The early retirement programme is proposed at a time the public sector wage agreement negotiations are underway ahead of the 2025 budget.

“Government is committed to a fair and respectful collective bargaining and negotiation process in determining remuneration levels and conditions of service, while meeting its constitutional obligation to respect the budget process and deliver responsible and affordable fiscal policy.”

Godongwana said there was an agreement at the bargaining council for a facilitation process.

“It came with a proposal, not an agreement, that we must move to 4.7% and in six months 1.4% and it becomes 6. It is a proposal we have not accepted. Unions are to get their new mandate,” he said, adding that the proposal from the bargaining council was not a final offer on the table.

Meanwhile, the National Treasury’s budget document stated that the public service bill has increased as a share of the GDP from 5.6% in 1994-95 to 10% in 2023-24.

This was largely due to the fast growing average remuneration cost of public service employees over the past three decades.

“The number of people served per public service employee increased from 32 to 48 between 1994-95 and 2023-24.

“As the demand for services such as healthcare, education, social welfare and security increases, it adds pressure on the limited number of public service workers,” reads the document.

However, in attracting and retaining skilled professionals, the government has over the years reformed remuneration structures and offerings."

“This was done through higher wages as well as numerous benefits and allowances.

“However, these higher average remuneration costs have become more expensive over time, hindering the government's ability to effectively grow the public service headcount due to affordability constraints.”

The National Treasury stated that the public service wage in the country has historically been relatively high compared to the national average.

“This wage disparity has been driven by a range of factors, including the introduction of occupation-specific dispensation in the public sector in 2007 to retain skilled professionals through competitive salaries, allowances, benefits and other progression opportunities.”

It stated that the government faced increased fiscal pressure as revenue declined to slower economic growth after the 2008 global financial crisis.

“While OSDs were necessary at the time to address wage disparities and retain skilled professionals, they added significant pressure to the public service wage bill during a time of fiscal strain. The OSDs catalysed the high average remuneration cost in years to come.”

Cape Times