Simon Mundy
13 November 2009
Johannesburg — PRESIDENT Jacob Zuma yesterday shot down a proposed 8% salary increase for senior state office bearers, opting instead for a 7% hike in a sign of belt-tightening as tax revenues plunge.
Zuma went against the wishes of several members of his Cabinet who had backed the 8% increase. Only Finance Minister Pravin Gordhan had voiced objections to the suggestion.
The higher raise was recommended by the Independent Commission for the Remuneration of Public Office Bearers.
The pay hike, backdated to April 1 this year, is in sharp contrast to last year's rise of 11%. It will see Zuma's annual pay rise to R2,25m and Deputy President Kgalema Motlanthe and National Assembly speaker Max Sisulu each receiving R2,05m. MPs can expect a yearly total of R771787.
Ministers have come under fire since it was revealed that ministers, deputy ministers and premiers spent about R45m on official cars this year. Planning Minister Trevor Manuel conceded last month that his acquisition of a R1,2m BMW was an "error of judgment", although no ministers have announced plans to return their vehicles. Gordhan spent well under the limit, buying a Lexus for about R550000.
Presenting its recommendations, the commission noted that "all responses received (from ministers and the chief justice) supported the commission's proposal of 8% cost of living adjustment, except for the response received (from) the minister of finance".
The views expressed by Gordhan "were previously considered and debated by the commission".
Pressed as to the nature of Gordhan's concerns, commission chairman Judge Willie Seriti said: "He did not support it, but I cannot speculate and tell you why not."
But deputy chairwoman Tshidi Mokgabudi said Gordhan had raised factors "around inflation; around the (economic) environment both globally and country- wide; about benchmarking, looking at the market rates".
Analysts welcomed Zuma's move to trim the increases as well as his apparent willingness to be guided by Gordhan, who warned in his medium-term budget statement recently of pressure facing the government's finances and the need for belt-tightening.
Zuma said: "In light of the current economic situation, and the pressure on government finances, I have decided to adjust downwards the percentage recommended by the commission."
SA is mired in its first recession since 1992, and the government has said its budget deficit will rise this year to 7,6% of gross domestic product, a 40-year high.
Dennis Dykes, chief economist at Nedbank , said the decision "sent a message" that public spending would be kept in check over the coming months. "We know the public finances are under huge pressure.
"There was a very clear message in Gordhan's medium-term budget speech, that ministries have to find ways of cutting back unnecessary expenditure. In that context an 8% wage rise would have seemed high."
Econometrix Treasury Management economist George Glynos said if Gordhan "hadn't argued for it to be reduced, it would have been hypocritical".
"When the government adopts a policy of inflation targeting, it has to lead by example. The lower increase is a welcome move towards trying to contain inflation expectations -- of the bargaining organisations in particular."
Be the first to Write a Comment!
Copyright © 2009 Business Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
