Government working with organised labour to achieve a fair wage settlement

Minister Tito Mboweni says Minister for the Department of Public Service and Administration, Senzo Mchunu, is working with various partners in organised labour to achieve a fair public-sector compensation dispensation when negotiating on a new multi-year wage settlement that would begin later this year.

Delivering his Budget Speech in Parliament on Wednesday, Mboweni said R83.2 billion has been made available for the public employment programmes since the 2020 Special Adjustments Budget. This will now be augmented by R11-billion for the Presidential Youth Employment Initiative, taking the total funding for employment creation to nearly R100 billion.

“The Minister for the Department of Public Service and Administration, Minister Senzo Mchunu, is working with our partners in organised labour to achieve a fair public-sector compensation dispensation when negotiations on a new multi-year wage settlement begin later this year. We have cumulatively made R83.2 billion available for the public employment programmes since the 2020 Special Adjustments Budget. We are now augmenting this by R11 billion for the Presidential Youth Employment Initiative, taking the total funding for employment creation to nearly R100 billion. This is in response to the job creation targets for young people. outlined by the President.”

Minister Tito Mboweni tables the Budget Speech: 

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Debt-service costs

The Treasury has warned that the increase in debt-servicing costs threatens the country’s ability to generate sufficient revenue to pay its debts. Debt-service costs have exceeded nominal Gross Domestic Product growth in recent years.

Debt is expected to increase from R3.9 trillion to R5.2 trillion by 2023/24. There is a growing concern that funds that could be spent on economic and social priorities could end up being redirected to pay the debt.

Mboweni says the government’s ballooning debt had far-reaching socio-economic implications.

“High government debt levels increase the cost of borrowing across the economy. The rising debt levels lead to higher future taxation and uncertainty. Servicing this rising debt takes away resources that could have been invested in infrastructure and strengthen our social solidarity.”

Economic growth is expected to increase at 3.3%  in 2021 from a contraction of minus 7.2%  in 2020.  The Minister says to promote faster growth, the government will stabilise the electricity supply and support industries with high employment. The government expects a mass vaccination programme to support the reopening of the economy and has allocated R10.3 billion to fund it over the next two years.

He says the government’s contingency reserve will also be increased from R5 billion to R12 billion. Mboweni says there is reason for optimism.

“ The main budget revenue is projected to be R1.35 trillion or 25.3%  as a share of Gross Domestic Product in 2021. This rises to R1.52 7 trillion in the year 2023-2024 of the medium-term expenditure framework.”

Analysis with Michelle Dickens:

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