Fitch raises concerns about wage cuts

File: Responding to Wednesday's Medium-Term budget, Fitch said there is limited room for offsetting measures in other expenditure areas. AFP/Cem Ozdel

JOHANNESBURG - Ratings agency Fitch has raised concerns about the government's ability to succeed in implementing wage cuts.

The agency says the government's record on negotiating wage agreements in line with budget assumptions is weak.

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Responding to Wednesday's Medium-Term budget, Fitch said there is limited room for offsetting measures in other expenditure areas.

The agency has already placed South Africa in sub-investment grade.

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Finance Minister Tito Mboweni has pledged to freeze the wages of the country's 1.3 million civil servants as part of the government's plan to narrow a yawning budget deficit and bring down debt.

Some analysts have said that basing future estimations on a zero percent wage increase for public workers may already make the budget unrealistic.

Source
eNCA