The government has conceded that it cannot afford to pay state workers their full salaries in the 2020 financial year, prompting a potentially politically explosive showdown with unions.
In his budget, finance minister Tito Mboweni announced a slash to the wage bill of R160bn over the medium term, and said the government would review a three-year wage deal that is already in place.
On the eve of the budget, the government tabled a document titled "Management of the Public Sector Wage Bill" before the Public Service Co-ordinating Bargaining Council. This contained the proposal for the review of the 2018 deal, prompting unions to react angrily.
The move pits President Cyril Ramaphosa’s administration against public sector unions — his strongest allies in the congress movement — mere months before the president is set to face a difficult midterm policy meeting of the ANC, the national general council.
The document tabled in the bargaining council, which the FM has seen, highlights that the government in 2018 settled with a deficit of R30.2bn in agreeing to the wage increase, "with the proviso that the employer will implement cost-containment measures in the form of a reduction of performance bonuses and early retirement without penalties".
"These measures did not yield any significant savings," the document read. "It is obvious that the state is facing [a] dire financial crisis in the immediate and medium term, that could have long-term repercussions if not well managed … The state cannot afford the last leg of the 2018 wage agreement," it warned.
Despite the acerbic response from labour and an earlier warning by Cosatu that if the proposal for a review made it into the budget, it would spell a "declaration of war", Mboweni pressed ahead. He told parliament that the proposal to review the last of the three-year deal — which was expected to take effect from April 1 — was aimed at saving R37.8bn.
Overall, Mboweni wants to save R160bn.
"For the credibility of our fiscus, the R160bn or so must be found for all our sakes. There’s no point … in trying to keep your cents, but losing our pounds," he said in a pre-budget briefing.
Cosatu, whose affiliated unions represent the vast majority of public servants, was quick to register its anger over the move to review the 2018 wage deal. "This review means ... that the hard-working public servants will not see any salary increase for the year 2020/2021 … This irresponsible and blatant act of provocation will seriously destabilise the public service and we warn the government to abandon this idea," its central executive committee said in a statement.
Cosatu also warned that there would "be a parting of ways with [the] government" should it press ahead with the review.
The Public Servants Association, representing about 230,000 workers, in a statement said public servants could not afford to "sacrifice" their expected salary increase, given the rising cost of electricity, petrol and other commodities.
Mboweni in his budget speech said public servants did crucial work for the country under "trying conditions", but added that over the past decade and a half the government had sought to "improve the lot" of public servants.
"We have committed significant resources for compensating them every year even as we have tried to increase their numbers in recognition of their demanding workloads. Between 2006 and 2011, we were able to add about 190,000 employees. However, at the same time government wages also increased," he said.
Hiring slowed in 2011 and the number of government employees declined, culminating in the size of classrooms growing, hospitals getting fuller and communities becoming increasingly unsafe. "Once we get wage growth, corruption and wasteful expenditure under control, we will focus our attention on hiring in important areas such as education, police, and health care," Mboweni said. He added that organised labour "understands where we are" and has made "constructive proposals" on a range of issues.
Reacting to the budget, Cosatu parliamentary spokesperson Matthew Parks said Mboweni was fixated on the public sector wage bill but there was no mention of recovering the R150bn looted from the state or arresting those responsible for corruption and state capture, nor was there anything about stimulating the economy and creating jobs. The budget was about attacking workers, he said. "It’s a huge disaster for us … they have thrown us under the bus. But … we will continue to engage, we have to find solutions."
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