Thalia Holmes
Trade unions have reacted with anger to Finance Minister Tito Mboweni 2020 budget speech announcement that the public sector wage bill will be cut by R160-billion over the medium term.
“Public-service compensation has grown by about 40% in real terms over the past 12 years, and remuneration growth is increasingly out of line with the rest of the economy,” the National Treasury said in the 2020 budget detail, in explanation of its decision.
“The wage bill remains the largest component of spending by economic classification.”
If the recommendations are implemented, wage bill reductions will amount to R37.8 billion in 2020/21, R54.9 billion in 2021/22 and R67.5 billion in 2022/23.
In his speech, Mboweni asserted: “organised labour understands where we are. They have made constructive proposals on a range of issues.”
But the Congress of South African Trade Unions, the country’s large trade union federation, indicated a contrary sentiment.
In a statement released immediately afterwards, Cosatu described Mboweni’s speech as “underwhelming and provocative”.
The budget “is a clear message to workers that the battle lines are drawn and the attempts to shift the burden of the crisis to them is in full swing,” it said.
The government has not fully considered the financial position and working conditions of the workers whose wages it proposes to cut, according to the federation.
“The headcount has been declining in the past few years as posts have been frozen. The freezing of these critical service delivery posts have resulted in one nurse performing the work of six nurses, doctors working 48-hour shifts, increasing teacher-learner ratios and an overwhelmed police service.
And contrary to the treasury’s assertion of a continuously growing public wage cost, Cosatu argues that the wage bill has remained around 35% of GDP for the past ten years, “in line with international standards”.
However, a working paper released by the International Monetary Fund in 2016 pins average wage bill expenditure at somewhat lower than this: around 20% for advanced economies and a little less than 30% in emerging markets, low-income and developing countries.
In its statement, Cosatu outlined other measures that could be used to stabilise the public fiscus.
“These include reducing bloated executive and management posts and perks, placing public sector entities and enterprises under a single public service and sector collective bargaining process, eradicating ghost posts, consolidating state entities and municipalities and filling of critical front line service delivery posts and possible reskilling and redeployment of staff as needed,” it said.
But the finance minister says that the fiscal situation is so untenable that it demands top priority.
“We cannot go on like this,” he said in his speech.
“Classroom sizes are growing, hospitals are getting fuller and our communities are 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. We can hire strategically, and better match skills with opportunities.”
According to Mboweni, the proposed cost reductions can be achieved “through a combination of modifications to cost-of-living adjustments, pay progression and other benefits.”
A senior government official told Inside Politic that less than 10 people took the government’s initial voluntary package by former Public Service & Administration Minister Ayanda Dlodlo.
The national treasury’s initial plan was to cut the number of public servants by 30 000 to reduce the wage bill.
“It [the previous voluntary package offer] did’nt fly at all. The main reason for that was because there were no incentives offered to those who could have considered taking early retirement. There was poor uptake. The offer has expired in September 2019,” said the senior government official familiar with behind the scenes talks to reduce the salary bill
While the senior government official said the move by the national treasury to reduce the wage bill was long overdue, he warned that it could hit the government hard in its pocket.
“As part of the sunset clause in 1994 there was an understanding that those who have been in the public service for long will have kept leave days. And the thing is if you kept your leave days as a junior official and today you’re promoted to a senior position, you’ll be paid all the kept leave days according to your current position. If you have 1000 public servants retiring in one year, the government will collapse as kept leave is paid within 7 days. When people talk about early retirement, they are not mentioning the kept leave,” said the senior official.
The issue of kept leave was raised as a concern by the Portfolio Committee on Public Service & Administration this week.
“If departments can conduct audits today to check how many officials have 50 kept leave days and how much that will cost, we will be shocked. It will be a time bomb. On average, many public servants have 30 to 40 years’ service and those who have been there for long have the most kept days and it would be too expensive for government if they were to retire at a go,” said the senior official.
During 2020, government will also legislate a remuneration framework that will improve alignment of pay scales with the public service, and “contain excessive salaries and other payments.”
Making good on promises made in the October medium term budget statement, the president tabled a gazette in the week preceding February’s budget speech.
The gazette spelled out that a number of senior government officials would not be receiving an increase this year. Officials earning less than R1.5 million would see increases of around 3%, it said.
With the increase freezes in place, ministers will earn R2.4 million, deputy ministers will take home R1.98 million and members of the national assembly will earn R1.14 million this fiscal year.
But Cosatu argues that this action does not go far enough. “It is poor leadership of politicians that led us into this crisis. They must lose their exorbitant salaries and perks,” said the federation.
Meanwhile, the Public Servants Association (PSA) released a statement the day before the budget speech, rejecting what it described as government’s “last minute request” to review the public service wage agreement.
“On the eve of the budget vote, government approached labour … with a request to review [the public service wage agreement], citing that it cannot afford the last leg of the agreement,” said the PSA. “Considering the current economic situation that is aggravated by rising electricity costs, petrol price increases, and a rise in the cost of most commodities, public servants simply cannot afford to sacrifice on a salary increase.”
The union said that the timing of the proposal, made just a few days before the adjustments were due to be implemented, speaks of a government that regards public servants as an “easy target” to resolve its financial woes.
“It is clear that proposals to government on how it could curb wasteful expenditure fell on deaf ears and instead of tabling clear proposals on how it intends to address its financial inefficiencies, public servants are made the scape goat.”
The National Union of Public Service and Allied Workers joined the PSA in refusing to entertain government renegotiations.
It described the budget speech as an “insult to the public servants”.
The union union said that “the [cost] cutting will not fly, as this only serves to disadvantage the working class. The public servants will not absorb significant budget cuts to bailout zombie state-owned enterprises, which risks compromising service.”
South African Federation of Trade Unions (Saftu) was equally indignant at the announcement. In a statement, the union said it “condemns in the strongest terms possible the cutting of R160 billion over the medium term. Government has the gall to suggest that it will even pull out of the existing pathetic agreement it rammed down the throats of the public servants who are members of Cosatu unions”.