Cape Town - The Department of Defence is set to spend about R1.8 billion on severance packages for soldiers as part of its efforts to reduce expenditure on employees.
This was revealed by Minister Thandi Modise during her response to parliamentary questions from ANC MP Cyril Xaba.
Xaba said over-expenditure on compensation of employees remained the largest contributor to irregular expenditure in the department.
He noted that the department previously indicated to Parliament that it intended to bring the expenditure under control by 2024-25 financial year through a number of interventions.
Xaba asked whether Modise had found that the Department of Defence was on track with implementation of the “mobility exit mechanism” for 2022-23 and whether over-expenditure on compensation would be under control by the 2024-25 financial year.
The department said earlier this year that the expenditure on compensation of employees comprised 64% of the total budget allocation of R32.7bn as at February 22.
In her response, Modise said a ministerial directive was approved in March 2021, initiating the implementation of human resources cost-saving measures to down-manage cost pressures over the 2021 medium-term expenditure framework (MTEF).
The interventions, she said, included maintaining a workforce of 73 000 over the MTEF, reducing reserve force days, intake of new recruits every second year, capping annual increases of allowances and implementing “mobility exit mechanism” and employee-initiated early retirement.
Modise said the early retirement for soldiers was initiated in April.
“The exit plan forecasts the separation of 1548 soldiers for the financial year 2022-23 at an expected cost of R1.868bn.
“The National Treasury has allocated R1bn to fund the Government Employee Pension Fund liabilities and approved the internal re-prioritisation of R868 million to cover the severance costs of members.”
Modise also said 433 ministerial approvals for early retirement had been granted and 256 others were under consideration.
“A further 500 offers are expected to be submitted for ministerial consideration on or before November 30.
“It is expected that approximately 1 200 members will separate via the mobility exit mechanism on January 31 2023,” she said.
Modise also said her department had taken progressive steps to implement human resources intervention to reduce human resources cost pressures over the MTEF.
“The forecast MTEF planning to down-manage human resources pressure denotes that the compensation of employees’ expenditure is likely to be reduced in the 2024-25 financial year and potentially break even in the financial year 2025-26.
“It is foreseen that a significant reduction of compensation of employees’ expenditure will occur when comparing the compensation of expenditure with previous years.”
She, however, said the human resources expenditure factors would adversely affect current forecasts due mainly to concluded wage negotiations and potential increase of military operations.
“The Department of Defence remains committed to implement human resources cost-saving measures aligned to planned human resources intervention,” Modise added.
Cape Times