(Bloomberg) -- South Africa’s government is reinstating a plan to offer early retirement to senior civil servants as it seeks to reduce its wage bill.
In its budget update released in Cape Town on Wednesday, the National Treasury allocated 11 billion rand ($625 million) over the next two fiscal years to fund the plan, details of which will be announced in February. Previous early retirement offers had limited take-up.
“Cabinet has approved an early-retirement program to reduce government-employment costs while retaining critical skills and promoting the entry of younger talent into the public service,” according to the budget statement. The authorities have been mandated to approve applications that “do not reduce the pool of highly skilled individuals within government agencies,” it said.
Containing personnel costs will be key to the government meeting its objectives of reining in state debt and the fiscal deficit. Reducing headcount may be an easier option than taking on powerful labor unions who’ve consistently demanded and won inflation-beating raises.
“Public-service remuneration is a complex issue that requires a delicate balancing act between attracting and retaining skilled personnel, ensuring fiscal sustainability and promoting economic growth,” the Treasury said.
It sees the compensation bill accounting for 31.4% of total government expenditure in the year through March 2028, down from 32.1% in the past financial year and a recent peak of 35.7% in the 2013-14 fiscal year.
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