South Africa’s government will take several years to bring its wage bill to more sustainable levels and may have to consider retrenching some staff, Finance Minister Enoch Godongwana said.
Compensation accounts for almost a third of state expenditure after rising by an annual average of two percentage points above the inflation rate for the past decade.
Wage restraint is pivotal to government efforts to rein in the nation’s debt, and it has budgeted to pay 3% annual increases for the next three fiscal years. Labour unions are demanding as much as 10%, with one of them embarking on a strike on Thursday.
“What I am doing with the wage bill, I am not doing it to please anybody, I am doing it as a matter of duty,” Godongwana said in an interview in Johannesburg. “It’s going to take a while to get to a number where it stabilizes”, and the compensation budget may even have to be increased at some point to fund retrenchments, he said.
The minister didn’t specify whether the state currently plans to fire workers, when that could potentially happen or how many of its 1.3 million staff could be affected. He also denied that the country is reducing its compensation bill under pressure from the International Monetary Fund.
The strike called by the Public Servants Association is having little impact, Moses Moshea, a spokesman for the Department of Public Service and Administration, said on Thursday. The union has about 230,000 members.
“All government offices are operating normally, with most if not all public servants at their posts,” although final tallies of those who stayed away will only be known later on Thursday, Moshea said by phone from Pretoria, the capital. “Those who were not present had to have a valid excuse such as sick leave, otherwise there is no work and no pay.”
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