News24.com | Govt debt growing due to 'bloated public payroll' - Parliament report

• The public sector wage bill remains the government's biggest expenditure.
• According to a parliamentary report, the public wage bill has grown by 40% over a 14-year period.
• In March, the government offered a 7.5% salary increase to settle a longstanding wage dispute. 

The public sector wage bill remains the government's biggest expenditure, growing by about 40% in real terms over the past 14 years.

A wage re-negotiation would reduce the share of compensation in total spending by just 1.5% and give the government slightly more space for servicing debt.

This is according to the National Assembly's Portfolio Committee on Public Service and Administration.

In its report on the Department of Public Service and Administration's annual performance plan and 2023/24 budget, the committee reported that the cost was increasing rapidly.

The committee said: "One big negative consequence of the bloated public payroll is that the government is having to increase its borrowing to sustain its salary payments.

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"The department conducted a review of personnel expenditure that will inform the development of a remuneration policy framework for the public service. "

"The terms of reference were developed and relevant stakeholders were engaged in 2022/23. A suitably qualified service provider was appointed in 2022/23 to review and analyse the framework and provide recommendations for improvements or alternative arrangements," it added.

In March, the government improved its wage offer to public servants to 7.5%, increasing the prospect of an early settlement to negotiations, trade unions believed.

A coalition of trade unions, which constitute a majority in the Public Sector Coordinating Bargaining Council, met in March to chart a way forward.

The unions are seeking a mandate from their members to adjust their wage demand to 7.5%.

It includes all public sector unions affiliated to the Federation of Trade Unions of SA and the SA Democratic Teachers Union.

READ | Government raises wage offer to unions

Increasing pay for public servants on salary levels one to 12 by an average of 7% would cost an additional R35.8 billion in the upcoming financial year, the Treasury said on 16 March.

Budget estimates released last month envisioned the compensation bill growing by an annual average of 2.1% over the six years through March 2026, down from 7.3% over the previous five-year period.

MPs also found the department was in the process of establishing a project management office tasked with introducing reforms.

These reforms would help build a capable, ethical and developmental state while managing the wage bill.

"Five work streams have been identified on the management of the wage bill and consolidation of bargaining councils; human resource planning and development; the professionalisation of the public service; the consolidation of medical aid schemes and public sector pension funds; and productivity measurement. 

"Over the medium-term, the department will continue to monitor and track the implementation of collective bargaining resolutions in order to enable it to resolve implementation issues before they develop into disputes," the committee's report read.