The National Treasury has cut by more than half the budget it previously allocated for the early retirement programme of government employees in a bid to further contain public service wage costs amid a deteriorating fiscus.
According to the Budget Review 2025 tabled before Parliament on Wednesday, the allocation for this initiative has been revised down from R11 billion estimated in October to R5.5bn across 2025/26 and 2026/27.
This amount has been divided into R2.2bn for the 2025/26 fiscal year, and R3.3bn for the 2026/27 year.
In the October 2024 MTBPS, Finance Minister Enoch Godongwana announced that the Treasury would be setting aside R11bn over the next three years to pay for the early retirement of at least 30 000 civil servants.
As a result, the early retirement programme will now only accommodate half of the estimated 30 000 workers that were previously targeted.
Duncan Pieterse, director-general at the National Treasury, said discussions with organised labour on the process were under way in the Public Service Co-ordinating Bargaining Council (PSCBC).
Pieterse said the allocation will be revisited on the conclusion of these consultations as part of the next budget process, although functions that are not parties to the PSCBC process – such as the Department of Defence – can proceed with implementation.
“Previously, we were targeting around 30 000 employees. Now it’s around 15 000. There’s still some work happening in the Public Sector Bargaining Council in order to allow us to implement that,” Pieterse said.
“But departments like defense, who are not bound by those rules, can really start implementing early retirement to deal with the PSCBC pressures.”
The programme was initially announced during the 2024 Medium-Term Budget Policy Statement (MTBPS) in October after Cabinet approved it to reduce government employment costs while retaining critical skills and promoting the entry of younger talent into the public service.
This is one of measures to build a capable State – one of four pillars aimed at lifting the economy to a higher and more inclusive growth path – that delivers a reasonable and reliable standard of public service that will foster the necessary environment for more growth and jobs.
It is earmarked to reduce the wage bill by incentivising highly-paid senior government employees to take early retirement without incurring any penalties.
This comes as the government is reviewing the budget process and trying to stabilize public finances amidst a deteriorating fiscus.
Finance Minister Enoch Godongwana told Parliament on Wednesday that work was under way to enhance the budget process – the foundation for sustainable public finances – and improve the efficiency and effectiveness of public spending.
He said this included the fiscal anchors reform and the early retirement initiative that were outlined in the 2024 MTBPS and March 2025 Budget Review.
“This budget also retains the provisional allocations for early retirement, allocations for PRASA and the municipal trading entity reforms announced before, but at a slightly lower level than anticipated in the March 12 budget,” Godongwana said.
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