2023 Budget: Public servants to get R45.6 billion for wage increases

Finance Minister Enoch Godongwana, in his 2023 budget speech, offered little insight into where government stood with regard to the ongoing wage negotiations currently underway, saying that the allocation of the budget towards public service wages did not pre-empt the outcomes of those negotiations.

South Africa’s public sector workers had high expectations ahead of the 2023 budget announcement on Wednesday afternoon, with many waiting to see how National Treasury was going to address the current financial struggles of the average South African.

Last week, some unions affiliated to Fedusa said they were ready to start a fresh round of negotiations for the new year.

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Difficult economic environment

Godongwana delivered his budget speech during a difficult economic environment, both domestically and globally.

Nevertheless, he announced an allocation of R45.6 billion for the carry-through costs of the 2022/23 public-service wage increase.

“In addition, the budget includes pay progression, a housing allowance, and other benefits for civil servants.

“The budget also provides additional funding for safety and security, education and health. In health, the funds are to hire new staff, address shortfalls in compensation budgets, and retain additional health workers appointed during the pandemic, as well as to clear the backlog in health services,” he said.

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But he emphasised that the budget did not anticipate the results of the wage talks.

“This and future wage negotiations must strike a balance between fair pay, fiscal sustainability, and the need for additional staff in frontline services,” he said.

Godongwana said that an unplanned wage settlement will need to come with substantial trade-offs in government expenditure as the wage bill is a significant factor driving costs.

No new hires for non-critical roles

As such, those funds will need to come from elsewhere, and so he explained that government will likely halt new hires in the public sector in what he called “non-critical roles”.

“This will mean restricting the ability of departments and entities to fill non-critical posts. It will also mean achieving cost-savings from major rationalisation of state entities and programmes,” he said.

Godongwana also hinted at government’s plans to combine or close some public entities to save money.

“As indicated by the president in the [State of the Nation Address], the National Treasury has already identified where large savings can be achieved.

“In this regard, during the upcoming financial year, the National Treasury will work with the Presidency on concrete proposals to achieve savings by rationalising or closing public entities. Recommendations will be made to the president and Cabinet and should form part of the next budget,” he said.

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