Treasury defends compensation spending cut as painful but fair

Dondo Mogajane described the compensation budget cuts as fair because, as he explained, it was a less painful alternative to other options that would impact more on service delivery to the poor and the vulnerable.

Treasury’s Director-General Dondo Mogajane. Picture: @SAgovnews/Twitter

JOHANNESBURG - As government and unions continue to struggle through this year's public sector wage negotiations, Treasury director-general Dondo Mogajane described the decision to cut compensation spending as painful but fair. Mogajane was addressing the government spending reviews conference.

He said because compensation spending was a large component of total spending, it was impossible to implement the fiscal framework without dealing with it.

Mogajane described the compensation budget cuts as fair because, as he explained, it was a less painful alternative to other options that would impact more on service delivery to the poor and the vulnerable, which would make it harder to raise economic growth again.

READ: PUBLIC SECTOR UNIONS WARN GOVT TO TABLE NEW WAGE OFFER

He added that it also affected all of the government equally, helping to reduce some of the difficulty that they sometimes had if they wanted to cut one area of spending and not others.

"We are engaged with the unions and it's an important thing, and we want to keep the collective bargaining process in place. Let's engage and hear what labour wants because it's important. But we may not have enough to meet the levels that are required."

However, he said there was another side to this: changes to remuneration policy was a blunt instrument for making changes to public spending.

Mogajane further explained that there was no world in which this was the optimal way to change the level and composition of public spending. That’s because the only true way would be if every programme in government were equally cost effective in delivering public services.

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