Budget 2026: R850bn public sector wage bill is government’s biggest expense

National Education, Health and Allied Workers’ Union (Nehawu) members picket outside Nasrec Expo Centre in Johannesburg on 29 July 2022. Picture: Nigel Sibanda Government is set to loosen the purse strings by an extra R90 billion, pushing consolidated spending to R2.67 trillion in the 2026/2027 financial year. Finance Minister Enoch Godongwana presented the 2026 Budget Speech at the Nieuwmeester Dome in Cape Town on Wednesday, outlining revenue and expenditure plans ahead of the fiscal year starting 1 April 2026.

Compensation for government employees continues to account for the largest portion of planned spending, representing 32.1% of total expenditure. The2026 budget reviewprepared by the National Treasury highlights that the public sector wage bill is expected to rise from R808.6 billion in 2025/2026 to R852.6 billion in 2026/2027. In an effort to manage costs, the government has introduced an early retirement programme for eligible employees under the age of 60.

Since its launch in October 2025, the programme has approved 7 687 applications, with the majority (4 644) from provincial departments. Early retirements are projected to cost R3.7 billion, but are expected to generate net savings of R5.5 billion over three years, including R2.6 billion in the 2026/2027 financial year. The budget review also highlighted efforts to identify ghost workers in the public sector. Employees who cannot be physically verified will have their salaries withheld while verification continues.