Government testing idea of voluntary severance packages

Wednesday, February 22, 2017

Cape Town – National Treasury has announced that government is currently testing the idea of offering voluntary severance packages to civil servants as a push is made to contain the wage bill.

This is contained in National Treasury’s Budget Review document that was released when Finance Minister Pravin Gordhan tabled his budget in the National Assembly on Wednesday.

“The National Treasury and the Department of Public Service and Administration are working with departments to reduce headcount, including testing the idea of voluntary severance packages,” National Treasury said.

In the Budget Review, National Treasury said the 2015 wage agreement put significant pressure on the public finances by crowding out spending on goods, services and infrastructure.

Between 2008/09 and 2015/16, national and provincial government salaries rose about 1.8% faster than inflation.

In total, salaries have nearly doubled, compared with an increase in the consumer price index of about 70%.

National Treasury projects expenditure on general public services to grow by 2.6% over the next three years - from R70 billion in 2016/17 to R75.6 billion in 2019/20.

“Of the baseline allocation, 43.5% is for compensation of employees, and 28.6% for goods and services.”

Spending on general public administration and fiscal affairs is expected to grow from R45.2 billion in 2016/17 to R46.8 billion by 2019/20.

“This will support improved responsiveness of the public service through the revitalisation of the Batho Pele programme and the implementation of the Public Service Charter.

“Public-service wage settlements generally provide for increases equal to inflation, plus a premium that is not linked to performance.”

National Treasury said in recent years, government has withdrawn nearly all identified funding for vacant posts and blocked appointments to non-critical vacant posts on the payroll system, pending the submission of revised human resource plans by departments.

During 2016, national departments were required to develop and submit human resource budget plans to the Medium-term Expenditure Committee (MTEC).

The committee is composed of senior officials from National Treasury, the Department of Performance Monitoring and Evaluation, the Department of Cooperative Governance and Traditional Affairs, and the Department of Public Service and Administration.

The plans allow the committee to manage headcount and vacancies within set compensation limits.

“The MTEC continues to monitor the implementation of these plans.”

National Treasury said, meanwhile, that negotiations on a new public-sector wage agreement are due to begin during 2017.

“An agreement that takes account of fiscal constraints will reduce some of the pressure on staff headcount and enable government to direct a larger portion of expenditure to capital investment.” –

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