Public sector wage demand unsustainable
The DA calls on the Acting Minister of Public Service and Administration, Nathi Mthethwa, to immediately engage with the various unions on their demands for a 10% increase in salaries following the ongoing public sector workers strike.
We are of the view that a 10% increase is unsustainable and would bloat the public sector wage bill by a further R50 billion.
Our ailing economy is at its weakest point since 2009 and the following indicators are reason enough to halt this outrageous increase:
Under President Jacob Zuma’s administration, the debt to Gross Domestic Product (GDP) ratio has ballooned from 27.8% in 2009 to 46.1% in 2014;
While our economy only grew at 1.5% last year, inflation over the past seven years has been on average almost 4 times that at 5.8%;
36.1% of South Africans are unable to find work, with 2 out of every 3 unemployed South Africans being youth; and
Our economy is no longer the most competitive in Africa.
Due to the fact that our economy has failed to create jobs outside the public sector, government has had to borrow substantially more money to pay public sector employees. We cannot continue to be paying salaries on credit.
In fact the DA has proposed reducing the public sector wage bill by R4.3 billion through key interventions such as avoiding above inflation rate salary increases, cutting back on salaries to superfluous departments and linking salaries to performance.
Instead, government should be channelling revenue into the creation of an economic environment in which small business and entrepreneurs can thrive and in turn create the 11 million jobs the NDP envisions by 2030.
The public sector wage bill currently stands at an astonishing R400 billion. The projected total will see an increase in the 2015/16 financial year to R430 billion.
This R430 billion represents approximately 35.5% of the total government budget.
Finance Minister, Nhlanhla Nene’s plan to cut the escalating public sector wage bill saw him commit the state to a fiscal consolidation strategy in his February 2015 Budget Speech.
This plan, if implemented, will see government freeze the public service head count and curb personnel cost increases to an annual average of 6.6%, ensuring that salary increases are linked to inflation.
It should be noted that government and public sector workers are negotiating a three-year wage deal and not an annual increase.
Unions are unreasonably demanding a 10% wage increase in the first year of the three-year wage agreement, with an inflation + 3% increase in each of the following two years.
Government is offering inflation + 1% in the first year and inflation + 0.5% in the following two years. Government’s offer is fair and would not break the bank by exponentially ballooning our wage bill.
The South African taxpayer already forks out in excess of R400 billion every year for a bloated and ineffective public service.
The unions demand for a 16% increase over three-years will push our already inflated public wage bill to astronomical heights.
South Africa can simply not afford a public wage bill that continues to balloon unabated.
Statement issued by Joe McGluwa, DA Shadow Minister of Public Service and Administration, April 23 2015
