President backs Mboweni’s public wage reduction plan

JOHANNESBURG – President Cyril Ramaphosa yesterday threw his weight behind Finance Minister Tito Mboweni’s plan to reduce the public sector wage bill.

In a carefully crafted response to the ongoing wrangle between the government and public sector unions, Ramaphosa said in his weekly newsletter yesterday that a large part of the savings would come from reducing the rate at which the wage bill grows rather than cutting the number of jobs.

“Our approach is not to dramatically cut the size of the public service, but to examine the rate at which wages grow,” he said. “Public service wages have, on average, increased at a much higher rate than inflation over many years, and we need to fix this if we are to get public finances under control.”

Last week, Mboweni announced R160.2billion adjustments on the wage bill over the medium term, with R37.8bn earmarked to be saved in the next financial year, in a bid to narrow the public debt. The wage bill remains the largest component of spending by economic classification.

The last wage agreement in 2018 was significantly higher than budgeted and the government has made a formal request to renegotiate this settlement.