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Mboweni urged to consider workers, taxpayers ahead of MTBPS

The MTBPS gives key government priorities and proposed divisions of revenue and other budget allocations.

Finance Minister Tito Mboweni delivers the 2019 Budget speech on 20 February 2019. Picture: GCIS

CAPE TOWN/JOHANNESBURG - As the nation looks to Finance Minister Tito Mboweni to spell out government's plan to rescue the declining economy, he has been warned not to introduce any more reforms to slash the Public Sector Wage Bill.

The Bill, which currently accounts for more than 35% of consolidated public spending, has been a headache for the state which needs to save every penny in light of an over-burdened fiscus.

Trade unions, however, said they would be watching Mboweni closely as he presents the Medium-Term Budget Policy Statement (MTBPS) to ensure workers don’t become sacrificial lambs.

Political parties such as the Democratic Alliance would be happy should Mboweni go after the Bill in an attempt to claw back some much-needed billions in the national purse.

But, should this be the case, the gloves will be off for workers’ representatives such as Cosatu, Saftu and Fedusa, among others.

Mboweni has already squared off with unions after he announced in February that the Bill would be reduced by R37 billion over the next three years through a number of interventions including offering early retirement packages to workers, a process which is currently under way.

The MTBPS gives key government priorities and proposed divisions of revenue and other budget allocations.

Since his Budget speech earlier this year, the economy has continued to take a serious knock, with market pressures to dealing with the Bill.

The 11-year record-breaking unemployment crisis which now affects 11 million South Africans has mounted even more pressure on the finance minister.

Political analysts said Mboweni must present workable solutions to address South Africa’s dire economic woes.

Given the dire state of the government's finances, Mboweni's mid-term Budget might shed some light on future tax changes and state spending.

Economist Dawie Roodt said the country was locked in a classical fiscal debt trap.

“The only way we can get out of this trap is to increase taxes or to cut back on state spending. Increasing taxes won’t help because the taxpayers are already overturned.”

Wits University economics lecturer Lumkile Mondi said Mboweni was also expected to touch on challenges facing the state-owned entities.

“Bailouts to state-owned entities, such as the SABC and Eskom, cannot be sustained without accountability.”

The MTBPS will also give an update on tax collection and economic growth targets.

‘CHALLENGE FOR JOB CREATION’

With the South African economy failing to create new jobs, economists warned that things might get worse before they get better.

South Africa’s struggling economy continues to shed jobs further contributing to an already high unemployment rate. Business, labour and opposition parties said while they were concerned, they were not surprised.

The latest data also shows that 38.5% of South Africans have stopped looking for work.

Economist Isaac Mashego said the South African economy faced a number of challenges.

“The economy is growing at such a weak pace and the little growth we see is not helping to create jobs. This creates a social problem in South Africa.”

Mashego said government and business initiatives aimed at job creation were not yet showing results.

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