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The public service and administration department has begun mooted plans to cut the public service wage bill starting in the new financial year in April.
The move is expected to save about R20.3 billion of the public purse in the next two years.
However, the plan would cost the government an estimated R16 billion over the medium-term expenditure framework, but savings would be realised as departments continued to fill the vacant posts by bringing in a younger and less-costly employee cohort.
The department said last week that the penalty-free early retirement enticement to public servants aged between 55 and 60 years would run from April until the end of September, targeting up to 30 000 of those who met the criteria.
Although there were potentially 126 710 employees within the prescribed age who could apply, only 30 000 would be considered if they wanted an early exit.
The savings would be unlocked, the department said, if each sector managed its human resources efficiently by filling the resultant vacancies “to yield these savings according to the guidelines provided”.
In a bid to allay the unions’ concerns, the department said early retirement without penalty was different from a voluntary severance package because the vacancies would still remain after the process and would need to be filled.
The public service wage bill was overloading government spending, resulting in an unsustainable R30.2 billion deficit from last year’s wage agreement and forcing government to “balance the need to move skills and resources in the public service to where they are most needed”.
The department said wages accounted for 35% of the total public sector spending.
The lowest-earning employee received a basic salary of about R83 000 a year, plus benefits of 37%, including medical and housing benefits and a 13th cheque.
They would also receive a performance bonus if they qualified.
The high earners, mainly professionals in occupational specific dispensations, could receive more than R2 million total cost to employer a year, “which is higher than the salary paid to a director-general of a department [meaning] we have to review the skills differentials according to what we pay”.
“We need younger graduates and professionals to enter the public service, so we need to free-up vacancies to reboot the systems by bringing in new skills for a modernised public service,” said the department.
It said the nature of jobs were changing with the advent of “digital government”.
A breakdown of the figures meant that each of the exiting 30 000 employees would cost an average of about R530 000.
“Departments are expected to manage their human resources and save about R20.3 billion only in the medium-term expenditure framework period.”
This would require posts being moved to where they are required. And younger entry-level employees, who are cheaper, would be brought on board.
The department said that unions would be involved in the process even though during last year’s wage negotiation “it had been explained to the unions that if we concluded an unaffordable agreement which resulted in a R30.2 billion deficit to the fiscus”, the government would have to look at other ways to save money.
The department said the process was lawful “based on the request of any employee to exit early without penalty, and therefore is not a severance tool”.
“As this is not a severance package, there is no provision for it to go to collective bargaining.”
But the department would, out of goodwill, share information with the unions.
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