Budget Speech 2020: Billions in government wages will be trimmed

Budget Speech 2020: Billions in government wages will be trimmed

- Tito Mboweni has announced plans to reduce the civil service wage bill by R160 billion

- The Finance Minister announced this endeavour during his 2020 Budget Speech

- The minister also announced that there would also be no increases for certain civil servants

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Finance Tito Mboweni has announced plans to reduce the civil service wage bill by R160 billion over the course of the next three years.

This announcement came as a shock to many, with the minister revealing the multi-billion-Rand cut in public sector employees' compensation.

The minister also announced that public office bearers such as MPs, ministers, judges and magistrates would not be receiving salary hikes during this financial year.

In the face of difficult economic times, slow growth and declining tax revenue, Mboweni announced that National Treasury aims to cut the state's wage bill by R37.8 billion by next March.

The wage bill is projected to be further reduced by R54.9 billion by the following year and another R67.5 billion in 2023.

READ ALSO: Budget Speech 2020: Mboweni announces no change in VAT, tax relief

Mboweni raised concern over the 40% growth noted for state salaries over the past decade saying that it is 'increasingly out of line with the rest of the economy

"The revised amounts will guide government forthcoming talks in the public service co-ordinating bargaining council. These reductions can be achieved through a combination of modifications to cost-of-living adjustments, pay progression and other benefits."

The minister announced that the state will soon table a bill that will lay out the legal framework for the salaries of state-owned entities:

"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 improves alignment of pay scales with the public service, and contain excessive salaries and other payments."

Mboweni seemed disappointed that few government employees were taking advantage of the early retirement offered to them:

"Take-up of the early retirement initiative has been slower than anticipated, and only the department of police has finalised implementation during 2019/2020. Other departments have submitted proposals, which are being processed and may result in further adjustments to baselines. At this stage, the anticipated savings have been largely reversed."

Briefly.co.za reported that Mboweni had announced during his previous speech that 30 000 civil servants above the age of 55 would be offered penalty-free retirement plans.

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Source: Briefly.co.za

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