The government has unveiled a plan to terminate the employment contracts of older and more expensive public servants and replace them with a younger workforce.
Finance Minister Enoch Godongwana said the early voluntary retirement programme, estimated to cost R11-billion over 2025/26 and 2026/27, was meant to reduce the government’s excessive employment costs while retaining critical skills and promoting the entry of young talent into the public service.
So big was the retrenchment process proposal that it was one of the key drivers of the state’s medium-term budget expenditure changes.
Public sector salaries
“South Africa’s average spending on public-sector salaries is well above that of many countries. Cabinet has approved an early retirement programme to reduce government employment costs while retaining critical skills and promoting the entry of younger talent.
“Accounting officers and executive authorities will have the authority to approve early retirement applications that do not reduce the pool of highly skilled individuals within government agencies,” said Godongwana.
Godongwana said the government aimed at controlling growth in the public-service wage bill by ensuring that public servants are compensated fairly while implementing measures to contain overall costs.
Over the past decade, the wage bill has decreased as a share of consolidated spending, falling from 35.7% in 2013-14 to 32.1% in 2023/24.
“By 2027/28, the wage bill is projected to decrease to 31.4% of consolidated spending. To further contain public service wage costs, the government is proposing to reactivate early retirement without penalties.
“To support this initiative, an additional R11-billion will be allocated over the next two fiscal years. Details will be set out in the 2025 budget.
Wage negotiations
Meanwhile, Godongwane said 2025/2026 public sector wage negotiations are under mediation, and the talks are expected to conclude by the time of the 2025 budget.
“Government is committed to a fair and respectful collective bargaining and negotiation process in determining remuneration levels and conditions of service while meeting its constitutional obligation to respect the budget process and deliver responsible and affordable fiscal policy,” said Godongwana.
He told a media briefing that a mediator has proposed that the government should raise its public sector wage offer to 4.7% from 3%, and that is still under consideration.
The public sector unions are demanding a 12% wage increase.
