DA WC cautions National Treasury against borrowing for expected R9 billion national shortfall on public wages
29 July 2022
Attention broadcasters: Find English audio clip from MPP Deidré Baartman attached.
National Treasury has admitted that they face a R9 billion shortfall on public sector wages, if government’s current 2% increase offer is accepted by labour. Negotiations are currently ongoing between National Treasury, the Department of Public Service and Administration and labour unions.
This came to light during a presentation by National Treasury to the Western Cape Provincial Parliament’s Budget Committee today.
This money has not yet been included in the budget for this financial year, meaning other services and investments risk budget cuts. What is even more concerning, is that National Treasury raised the possibility of borrowing the money to fund this shortfall and pay government salaries, though this was raised as a last resort.
There is no sound economic argument for using borrowed funds to pay wages. It is irresponsible, unsustainable, and such recklessness would threaten to plunge the already ailing economy into a fiscal crisis.
The current planning for wage growth over the MTEF also does not take account of the rampant inflation that the country is currently facing and will likely continue to face for the foreseeable future. With inflation reaching 7.4% in June, should the current 2% offer from government not be accepted by unions, the R9 billion shortfall may well be much larger.
Notwithstanding the immediate wage increase for this financial year, which was somehow not deemed necessary to plan for by government, wage increases of 4.1% and 4.5% are planned for in 2024/25 and 2025/26 respectively, well below current inflation trends, meaning more shortfalls are likely to follow.
MPP Deidre Baartman says: “The DA in the Western Cape calls on National Treasury to provide details on how exactly it plans to fund the looming R9 billion budget shortfall on public wages. We will not simply stand by and allow the ANC to take the easy way out and sacrifice the long-term fiscal sustainability and economic stability of the country by borrowing money won’t be able to afford to pay back in order to pay wages.”
Issued by Deidré Baartman, DA Western Cape Spokesperson on Budget, 29 July 2022
