Godongwana’s plan to cut thousands of government jobs

The National Treasury has begun implementing its Early Retirement Programme in earnest to rejuvenate the public sector and cut costs. 

Since the programme commenced in October 2025, 7,687 applications for early retirement have been approved, with R3.7 billion of funding used. 

In the 2026 Budget Review, the National Treasury noted that the estimated net saving from this programme is R5.5 billion, of which R2.6 billion will be realised in the current financial year, R1.4 billion in 2027/28, and R1.5 billion in 2028/29. 

Finance Minister Enoch Godongwana also gave the programme a subtle boost in his Budget Speech, giving it an additional R340 million top-up. 

This programme is intended to create a younger public sector workforce that is less costly for the state to employ and more efficient. 

The Early Retirement Programme, which includes voluntary exits, aims to incentivise older public servants to retire early, thereby making the state’s workforce younger and relatively cheaper.

Those wishing to pursue this option must apply, with approvals granted only by the relevant executive authority.

Up to 30,000 state employees are expected to opt for early retirement. The programme aims to manage staff headcount in a targeted manner and revitalise the public service.

The money will also be used to attract younger employees into the public sector workforce, ensuring that when key staff are lost due to natural attrition, these posts can be filled.

In last year’s Medium-Term Budget Policy Statement, Godongwana revealed that the state cut the amount allocated to fund the Early Retirement Programme to make up for lost revenue from scrapped VAT hikes. 

Despite the programme now beginning in earnest, there are still some questions regarding how it is playing out in practice. 

State workers aged between 55 and 60 are likely to be offered two weeks’ pay for every year they have worked, up to a maximum of 20 years, and one week’s pay for every year they have been employed after that. 

Any penalties usually incurred by those taking early retirement will likely be waived.

Godongwana estimated that the early retirement incentive will result in average annual savings of R7.1 billion per year over the medium-to-long term. Previous early retirement offers had limited take-up, casting doubt on the projected savings.

The issue of a bloated public service needs to be addressed, with National Treasury’s data indicating that it is more challenging to tackle than many think. 

Not only are too many people employed by the state in South Africa, but the public workforce is also skewed towards older, higher-earning individuals. This exacerbates the public sector wage bill. 

The National Treasury has attempted to slow the growth of the public sector wage bill by trying to encourage government departments to hire younger workers, who are relatively cheaper to employ. 

This wage bill includes the compensation of government employees at the national, provincial, and local levels. It also includes the wages of employees at public entities and state-owned enterprises. 

The government’s attempts to rein in spending on the public sector wage bill appear to be bearing fruit, with state employees receiving a below-inflation increase for the past financial year.

However, over the past decade, the wage bill’s growth has far outpaced inflation, and an increasing share has gone to the highest earners.