Finance Minister Tito Mboweni faces an uphill battle to get the country’s finances under control, contain spending and boost growth and employment in a country struggling to achieve any of these objectives. BudgetSpeech2020
The biggest elephant in the room is the state as the country’s largest employer. Public service wage growth has accelerated by 40% over the past 12 years, putting the wage bill on an unsustainable trajectory. The minister has drawn a line in the sand, committing to reducing this bill by R160.2 billion.
These reductions can be achieved through a combination of modifications to cost-of-living adjustments, pay progression and other benefits. Wage bill growth outside the public service is also contributing to fiscal pressure. During 2020, government will legislate a remuneration framework for public entities and state-owned companies. The framework will improve alignment of pay scales with the public service, and contain excessive salaries and other payments.
“There is too much wastage in the government sector. The whole state system is a problem. It will be tough. It’s like going to the dentist to have teeth extracted without anaesthetic. But there is lots of cleaning up we can do.”Broadly, the budget says of fiscal risks:“Persistently weak economic growth is the central factor limiting improved public finances.
Other reductions are being applied, wherever possible, to poorly performing or underspending programmes.
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