National Treasury will be spending a whopping R23.4 billion on the three-year public-service wage agreement for the medium term expenditure framework.
WHILE the government budget has yet to be tabled in parliament, the National Treasury intends spending a whopping R23.4 billion on the three-year public-service wage agreement for the medium term expenditure framework.
It said the agreement reached with public sector unions will bring certainty for the fiscus for the next three years unlike the previous agreements that only covered one or two years.
“R23.4 billion is made available for the 2025 public-service wage agreement, which secures certainty for the fiscus for the next three years.”
This emerged from the 2025 budget documents that would have been tabled by Finance Minister Enoch Godongwana, but his budget speech was postponed on Wednesday to March 12 to allow further consultation among parties in the GNU.
On the same day, the Public Sector Coordinating Bargaining Council (PSCBC) announced that it has successfully completed negotiations after securing a majority party agreement of 83.34%.
Parties had been given a 21-day period to consult on the draft wage agreement.
The National Treasury said the salaries of civil servants will increase by 5.5 % in 2025-26 and there will be a 1% adjustment based on consumer price index in the two following financial years.
“This agreement will cost the fiscus an additional R7.3 billion in 2025/26, R7.8 billion in 2026/27 and R8.2 billion in 2027/28.”
The Treasury said the government will partially draw down on the contingency reserve to meet the wage agreement costs.
“Although the agreement exceeds the 2024 Budget and MTBPS projections, its three-year duration reduces uncertainty in budget planning.”
The provinces will be allocated an additional R4.8 billion in 2025/26, R5.2 billion in 2026/27 and R5.4 billion in 2027/28 to help implement the 2025 public-service wage agreement.
Meanwhile, the National Treasury appears intent to push ahead with the early retirement incentive announced in the 2024 Medium Term Budget Policy Statement (MTBPS) aimed to rationalise and rejuvenate the public service.
“Government is reactivating early retirement without penalties to help manage wage costs while attracting talented younger employees into the public service.
“An additional R11 billion is allocated over the next two fiscal years for this initiative.”
The plan, the national Treasury said, was aimed to manage headcounts by incentivising employees over 55 years old to retire and moderate compensation spending as younger employees join the public service at entry level salary grades.
It said preliminary savings were expected to average R7.8 billion per year over the medium to long term.
In terms of the early retirement initiative, R4.4 billion is allocated in 2025/26 and R6.6 billion in 2026/27.
“These amounts are set aside for departments to access during each financial year if they meet the relevant requirements, such as the minimum age of each applicant and confirmation that each application has been approved by the relevant executive authority.
“Departments will be allowed to retain their savings from this initiative, and may use them to address existing compensation pressures and support capacity building.”
Those wishing to pursue this option will have to apply, with approvals given only by the relevant executive authority.
Up to 30 000 state employees are expected to opt for early retirement.
mayibongwe.maqhina@inl.co.za