POLITICS

Gordhan must address the public sector wage bill - SACCI

Neren Rau says that 23% of employees are now employed by the public sector, more than any other sector

SACCI EXPECTATIONS OF THE 2013 MTBPS

The South African Chamber of Commerce and Industry (SACCI) is eager to hear Minister Pravin Gordhan provide details of this years' Medium-Term Budget Policy Statement (MTBPS). SACCI expects that the Minister will discuss the following topics during his address:

South Africa's credit rating and government debt

South Africa's economic growth is highly dependent on attracting and sustaining the interest of foreign investors. It is arguably the most important immediate policy priority because the government needs to borrow funds as cheaply as possible in the short term to expand our infrastructure network and accommodate the growing public sector wage bill. Despite these short-term pressures that necessitate borrowing, the National Treasury must also present a credible plan on how government debt will be reduced over time in order to improve our credit rating and facilitate easier access to finance for the private sector.

Carbon tax

SACCI has been at the forefront of advocating against the proposed Carbon Tax that would lead to massive job losses and further entrench South Africa's de-industrialisation trend. Other concerns over the impact on investor confidence and the sustainability of various sectors ranging from heavy industry to agriculture implies that Minister Gordhan should present a more feasible plan and delay the implementation in 2015 in order to provide sufficient time for stakeholders to fully deliberate on the issue.

Public sector wage bill

Over the course of the past 5 years the public sector has displaced the trade sector to become the single biggest employer at 23% of total employees. Over this period the number of government employees increased by around 19%, compared to a 1% decrease in total employment. The direct impact of this trend is that one in four South African employees now works for government. Merely paying public servants has now become a major influence on fiscal policy, as opposed to building school, expanding infrastructure and providing basic services. This trend is unsustainable and the South African business community calls on Minister Gordhan to commit to drastically reverse rather than merely delay the growth of the wage bill.

Employment Tax Incentive

SACCI commends the National Treasury for moving forward on the Employment Tax Incentive and wishes to emphasise that the business community supports the policy in principle. However, the proposal in its present form severely limits the application of the incentive to Special Economic Zones (SEZs) and specific industries which effectively curtails the beneficial impact of the incentive. Despite the pressure from Organised Labour, National Treasury must roll out the tax incentive in a meaningful way. SACCI expects Minister Gordhan to address the issue squarely in his address and provide certainty on the implementation and funding towards the incentive.

SME tax administration

SACCI has participated in exploratory discussions with the Treasury's Tax Review Committee on ways to improve tax administration of SMEs and was excited about the potential for real progress towards a more business friendly tax regime.

SACCI hopes that the concerns of the South African business community relating to fiscal discipline, an eroding tax base and the need for concrete commitments to programmes supportive of economic recovery, will receive positive attention in the MTBPS.

Statement issued today the CEO of SACCI, Mr Neren Rau, October 22 2013

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