How a spending review of compensation spending changed government policy in South Africa

ABSTRACT

This paper examines the influence of compensation spending reviews on government policy by analysing the case of South Africa, focusing on an extended review of the drivers of payroll costs. It addresses the decision by the government to renege on a wage agreement with public sector unions and the subsequent backlash from labour unions, and explains how spending reviews contributed to this. The paper outlines the methodology used for the analysis and summarises the key findings of the compensation spending reviews conducted between 2017 and 2020. It also discusses the implications of the decision and subsequent developments for compensation spending in South Africa.

KEYWORDS:

• Compensation spending review
• public sector wages
• labour unions
• public finances
• wage agreement
• public sector unions

Disclosure statement

The authors led the spending reviews and analyses of payroll data described in this article.

Notes

1 The authors were participants in this process. As researchers attached to the Government Technical Advisory Centre, they had produced the analyses of government’s payroll data and had drafted many of the key reports, including the annexures in the MTBPS.

2 See the companion piece on payroll data analysis in this volume (Boraine & James, 2023:4)

3 Note that the following section summarises data presented in National Treasury (2017, 2018, 2019), treating the three sources as a whole.