In search of R160bn; ANC calls emergency talks on state wages

By Paul Vecchiatto

(Bloomberg) – The leadership of South Africa’s ruling party called an emergency meeting to discuss the government’s plans to curb its wage bill – a move that has angered its labour-union allies.

The National Treasury proposed in the budget on Wednesday that pay increases, benefits and promotions for the nation’s 1.3 million civil servants be limited, with a view to saving the state R160bn ($10.4bn) over the next three fiscal years. Unions rejected the move, saying workers shouldn’t be made to pay for the government’s failure to spur growth and contain its debt.

The African National Congress’s national working committee will convene on March 2 to discuss the matter, according to two senior party members who spoke on condition of anonymity because they aren’t authorised to comment. Leaders of the Congress of South African Trade Unions and the South African Communist Party, which form part of the country’s ruling coalition, will later join the talks, they said.

The plans to curb personnel costs came as a surprise to many within the ANC, who fear the move will cost the party support in next year’s municipal elections, the party members said. ANC spokesman Pule Mabe confirmed the committee meeting, but declined to say what would be discussed.

South Africa’s state wage bill has surged 40% more than inflation over the past 12 years and accounts for more than a third of total government spending. National Treasury Director-General Dondo Mogajane said Wednesday the plan to cut the state-wage bill is expected to result in lower pay increases, rather than reduced remuneration.

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