Expatica news

South Africa to cut wage bill to rein in public spending

South Africa’s finance minister on Wednesday announced plans to slash the public service wage bill as part of efforts to curb ballooning government spending and avoid a financial crisis.

The civil service payroll has grown by about 40 percent in the last 12 years and currently gobbles up about 35 percent of total consolidated expenditure.

“We will propose a new law to stop excessive salaries in these public entities,” Minister Tito Mboweni said in his annual budget speech before parliament.

“There’s lots of cleaning-up things we can do,” Mboweni said in a pre-budget news conference.

“But my experience now is (that) sometimes trying to get rid of very simple wastage things in the state system is like going to the dentist’s to get your teeth taken out without anaesthetic,” Mboweni said.

The continent’s most industrialised economy has suffered huge economic woes in recent years.

Weak growth, deteriorating public finances including a swollen budget deficit, crippling power cuts and soaring unemployment still cloud the outlook.

President Cyril Ramaphosa has alluded to the crises, warning during a state-of-the-nation address last week that government debt was “heading towards unsustainable levels”.

The budget deficit currently stands at 6.3 percent of GDP.

According to budget documents, the country’s economy grew by only around 0.3 percent in 2019, and is expected to grow by a dismal 0.9 percent in 2020.

Other cost-saving measures will include requiring all government officials to travel economy class on domestic flights.

Additionally, the foreign ministry will close and merge some overseas diplomatic missions and reduce their staffs.