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The Public Service wage settlement will cost taxpayers an additional R43 billion over the medium term.

The three-year agreement will cost an additional R5.5 billion in 2012/13, R9,2 billion in 2013/14, R11.4 billion in 2014/15 and R17 billion in 2015/16. These figures were revealed by Finance Minister Pravin Gordhan in a written reply < to a question I posed to him querying the total cost of the settlement to the fiscus.

In contrast, South Africa will spend R67.66 billion on higher education Institutions, R30.1 billion on maintaining and expanding the country’s water supply and R48.2 billion on housing development over the next two and a half years.

According to the Minster, the three-year wage settlement will be financed from “drawdowns on the planned contingency reserve”, with resources made available from savings and the “reprioritisation on expenditure”. This raises questions about which government expenditures items were reprioritised to accommodate Cosatu's demands.

Instead of granting an across-the-board increase, government should have linked pay to performance, so that those teachers, nurses and doctors who go beyond the call of duty can get rewarded for their efforts, while those bureaucrats who are unproductive receive smaller increases.

The settlement agreement does, however, commit the government to tabling a new remuneration policy by March 2013, with a view to implementation by September next year.  The DA will hold the Minister of Public Service and Administration Lindiwe Sisulu to her commitment that salary increases will be “based on productivity and performance improvements” in that review.