GAUTENG'S RATIONALE FOR TERMINATING SALARY DEDUCTIONS

Issued by: Gauteng Provincial Government

28 June 2000

We confirm that the Gauteng Provincial Government has taken a decision to terminate non-statutory and non-service benefit deductions from the payroll.

This means that only deductions for: Taxes; Pension fund contributions; Medical aid contributions; Motor schemes payments; Mortgage bond payments linked to home-owners allowances; Contributions to trade unions; and Orders of the Courts.

We have also allowed for deductions for group schemes contracted by government and contributions to retirement annuities for an interim period allowing for a fuller analysis and more detailed taxation arrangements to be entered into.

All employees have received correspondence and notices giving them until 1 September 2000 to make alternative arrangements for the fulfilment of their obligations. Furthermore, letters were sent out to all the organisations and companies that currently benefit from using the payroll deductions, informing them of our decision.

The decision was not taken lightly. The reasons to terminate the deductions are briefly as follows:

• Employees take home pay in some instances amounted to zero due to overcommitment to these organisations;
• The lack of proper credit and affordability checks by organisations in signing up of staff;
• The use of the access to the payroll as an implicit guarantee for the granting of facilities;
• Attempted fraud in the application of the payroll deductions;
• The cost of administration of these deductions;
• The fact that only less than 5% of Gauteng Provincial Government employees do not have bank accounts currently; and
• The strong and highly sophisticated banking sector that exists in South Africa The Gauteng Provincial Government believes that we need to focus on our core function of delivering services to the people of Gauteng. The management of payroll deductions for non-statutory purposes is not one of our core functions and is best dealt with by the banking sector.

We have a responsibility to ensure that we provide adequate notice to our staff and the organisations affected to make timeous alternative arrangements. We have embarked on a comprehensive communications effort to get the message across. We also believe that as a responsible employer, we have an obligation to provide advice and education to our work force on personal financial management issues.

The Gauteng Government has demonstrated that we are willing to confront issues and take tough decisions that we believe are in the long-term interest of this Province. We are committed to improving the quality of life in Gauteng.

Issued by the MEC: Finance & Economic Affairs, Mr Jabu Moleketi

For further information please contact the Head of Department:
Finance and Economic Affairs - Thenjiwe Hlatshwako (011) 355 8701