‘Public-sector wage freeze won’t stave off downgrade’
The group’s chief economist Johann Els said the downgrade had become a possibility, as the National Treasury’s options for getting the Budget and debt under control would have little impact, and take more time than cutting expenditure.
“Despite what we saw in the disappointing Medium-Term Budget, expenditure cuts could still be on the cards, but they would have to be significant to make any kind of impact,” he said.
Moody’s, the only ratings agency that still has South Africa’s debt above junk, last month reviewed its outlook for the country from stable to negative, citing the unsustainable wage bill, among others.
The average wage increase across the public service was 6.8percent in 2018/19 or 2.2percent above inflation, and a cumulative 66percent increase over the past 10 years.
Source: iol.co.za
