DEBT SURGE

…Treasury sees debt surge if wage deal proceeds

JOHANNESBURG- South Africa is opposing a bid by labour unions to compel the state to honour a public-service wage deal, warning the accord would lump the country with R37.8 billion of additional debt.

The government in April reneged on an agreement to raise pay for more than 1.2 million employees as part of an effort to stabilise state finances.

The Public Servants Association, which represents about 250, 000 government workers, took the dispute to the Public Service Co-ordinating Bargaining Council and the matter is now before the Labour Court.

PSA spokesman

Reuben

Maleka and South African Democratic Teachers Union Secretary-General Mugwena Maluleke said their organisations are opposing the government.

The Congress of South African Trade Unions, the nation's biggest federation of labour groups, on Friday called for protests this week to back their demands for the government to honour its wage agreement.

Freezing the pay of civil servants is critical to Finance Minister Tito Mboweni's plans to cut government spending by R230 billion over the next two years to rein in surging debt. About a third of the government’s annual R1.95 trillion budget is spent on salaries.

Mboweni is scheduled to present his medium-term budget later this month.

Increasing government employees' wages is unaffordable, particularly given the impact of the coronavirus pandemic on state finances, Treasury Director-General Dondo Mogajane said in a July 17 affidavit.

"Government is compelled by the Covid-19 pandemic to spend public funds (which are already in deficit) to alleviate the plight of the poor and vulnerable," he said. "Regrettably government simply cannot in these circumstances accede to the applicant's claim for yet further increases."

Public Service and Administration Minister Senzo Mchunu backed the Treasury in a September 25 affidavit.