The National Treasury has confirmed that the government’s latest wage offer to public servants would break the compensation ceiling.
This means that Treasury will have to make reductions in other areas of government spending, which includes allocations for key service delivery budget items.
Although unions initially demanded 7% hikes across the board, government has offered them 1.5% and a monthly R1,000 payment. The lowest-paid workers will get adjustments of about 11.7%.
Treasury said its preliminary costing indicates it will need about R20 billion to fund the deal for one year. National Treasury chief director Edgar Sishi told Radio 702 that while the 1.5% pay progression due to several employees was budgeted for, the rest of the offer is negotiated through a political process.
Sishi said the ministers who form the mandating committee on wages were apprised of the consequences if they breached the ceiling. “We would try to avoid making reductions to critical priority areas. But it is unavoidable that if you negotiate beyond the ceiling, you are going have to find the money from somewhere. The compensation ceiling would be bridged by the new offer which means funds will have to be taken from elsewhere to make up the difference.”
[Photo: Raymond Morare for Fin24]