Will budgeting for public sector wage increase affect service delivery?
Government and organised labour have finally agreed to a new public sector wage deal.
All public servants will get an increase of 1.5% and at least R1,000 in monthly cash payments for a period of a year.
The majority of trade unions representing them have accepted the offer.
Is this a good deal for tax payers? asks Bruce Whitfield.
It could have been worse, comments Citibank economist Gina Schoeman.
Aside from being good for the budget, she says, the agreement is also a good sign in terms of the relationship between Government and National Treasury.
It's certainly an establishment of a downward trend in the public sector wage bill...Gina Schoeman, Economist - Citibank
Treasury certainly sticking to its guns, saying: We're only budgeting for a certain amount. We can't afford more and we need government to support us.Gina Schoeman, Economist - Citibank
But surely the fiscus is coming under additional pressure already now that the president has announced the extension of the R350 social relief grant?
Schoeman explains that the public servant wage increase will not come from Treasury's pocket.
That is going to contribute about an additional R18 billion... but effectively, Treasury won't be spending more money...Gina Schoeman, Economist - Citibank
It's the departments themselves that will have to go into their budgets and try and come up with some reprioritisation to pay for that. So who knows what that does to service delivery down the line...Gina Schoeman, Economist - Citibank
The wage bill itself shouldn't cause the Budget to spend more than what was already budgeted for... Tomorrow we will find out exactly what the full support package [for grants] costs government...Gina Schoeman, Economist - Citibank
Schoeman also discusses how an improved global economic outlook will continue to benefit South Africa.
"For the six or seven months so far this year, we have benefited extraordinarily from commodity prices and that has helped to create quite a big revenue windfall for the Budget."
Listen to the discussion on The Money Show: