Mixing grapes and guavas

Treasury director-general Dondo Mogajane argued in parliament on March 8 that “we are nowhere near Greece” and claimed that the public sector wage bill would not be cut, only its growth slowed (“SA’s latest budget is not one of austerity, says Treasury” March 8).

He said the 2020 budget means the compensation of employees will still be growing, by 1.5%, 4.5% and 4.4% a year over the next three years. This deserves further information before parliament goes to a vote on the 2020 national budget.

How do Mogajane’s numbers fit with the planned cut to the public sector wage bill of R160bn over three years? Is it wrong to say that this corresponds to a reduction of something like 143,000 employees in the first year alone, as I did on March 10 when posing questions to the Treasury?

The director-general diverted criticism by speaking of the larger consolidated budget. It includes many more public entities than the smaller main budget. But it is to the main budget, financed by tax money, that the draconian cuts in labour costs are planned.

In table 1 on page 185 of the Budget Review, the labour costs in the main budget are cut by R37.8bn in the first budget year. In the coming two years the cuts are R54.9bn and R67.5bn respectively. It is called “compensation of employees adjustments”.

The main budget’s contribution to the lowering of the “budget baseline” is simply a flat-out cut in “compensation of employees”. This cannot be done only by “freezing wages”. An axe will have to be used to get what the Treasury wants.