Treasury: Govt’s wage offer to public servants will break compensation ceiling

This means Treasury will have to make reductions in other areas of government spending which include allocations for key service delivery budget items.

Finance Minister Tito Mboweni delivers his Budget speech in Parliament on 24 February 2021. Picture: GCIS.

JOHANNESBURG - National Treasury has confirmed that the government’s latest wage offer to public servants would break the compensation ceiling.

This means 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.

As the government appears convinced that a settlement can be within reach in the public sector wage negotiations, 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 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.

He said the ministers who form the mandating committee on wages were appraised of the consequences if they breached the ceiling.

“We would try 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.”

The lowest-paid workers will get adjustments of about 11.7%.

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