Finance Minister Enoch Godongwana has revealed that the government plans to terminate the contracts of up to 30 000 elderly public servants.
These details are contained in the 2025 Budget Review published on Wednesday.
In the Medium Term Budget Policy Statement (MTBPS) delivered in October, Godongwana hatched the massive voluntary retrenchment programme, which is expected to cost the government R11-billion.
His plan aims to replace the older workforce with young people.
The minister said the R11-billion will be used to incentivise thousands of public servants who opt for early retirement packages.
Reducing compensation costs
“The early retirement incentive announced in the 2024 MTBPS is being rolled out to reduce compensation costs while rejuvenating the public service,” said Godongwana in the 2025 Budget Review.
“Over the next two years, the 2025 Budget provides R11-billion in funding to incentivise public servants to retire early.
“Those wishing to pursue this option will have to apply, with approvals given only by the relevant executive authority.
“Up to 30 000 state employees are expected to opt for early retirement. The programme aims to manage staff headcount in a targeted manner and revitalise the public service.”
However, the plan was heavily criticised by trade union federation Cosatu, saying it will result in public sector brain drain.
Plan aims to manage headcounts
Godongwana added that the early retirement retrenchments would be implemented without penalties to help manage wage costs.
“The plan is to manage headcounts by incentivising employees over 55 years old to retire and moderate compensation spending as new recruits join the public service at entry-level salary grades.
“Preliminary savings are expected to average R7.1-billion per year over the medium to long term. Savings will be retained by departments,” he said.
Godongwana said government departments’ access to funding to address compensation shortfalls will be linked to participation in the early retirement initiative, which is allocated R4.4-billion in 2025/2026 and R6.6-billion in 2026/2027.
He explained: “These amounts are set aside for departments to access during each financial year if they meet the relevant requirements, such as the minimum age of each applicant and confirmation that each application has been approved by the relevant executive authority.
“Departments will be allowed to retain their savings from this initiative and may use them to address existing compensation pressures and support capacity building.”
