Public-sector strike will be worse in 2020
It was pretty ballsy of finance minister Tito Mboweni to propose such a drastic cut to the public wage bill on the eve of the ANC’s national general council (NGC) and local government elections. Announcing that the government wants to slash the total public wage by R160.2bn over the next three years was certainly not what was expected from him.
The proposal envisages an immediate reopening of the three-year wage agreement currently in force and a settlement at the prevailing increase in the consumer price index (CPI) minus three percentage points for 2020. This is a substantial reduction on what workers would otherwise have received on April 1, which for most employees would have included a cost-of-living adjustment of inflation plus half a percentage point, as well as notch increases of at least another point.
But this is just a proposal pencilled into the budget that still needs buy-in from the unions, which as it stands seems unlikely given that the ANC’s alliance partner, union federation Cosatu, has already rejected it, calling it a “declaration of war”.
The SA Federation of Trade Unions (Saftu), a breakaway from Cosatu, is also vowing to fight the proposal, and the EFF has said it will stand with the unions.
While many South Africans — other than public servants, obviously — are praising Mboweni for this bold decision, it could end up being a doubleedged sword for the ANC-led government. If it succeeds in convincing the unions to accept the new wage offer, the government will be applauded for taking decisive action on fiscal consolidation, especially in such difficult economic times. This will bode well for the ANC at the polls as it will show that, contrary to the widespread perception, it is actually capable of taking hard decisions and implementing them.
On the other hand, if the unions stick to their guns and refuse to cave in, SA could find itself facing another huge public sector strike, the first since the 2010 World Cup.
After that event, hosted by SA, more than 1-million public sector workers embarked on a strike that crippled schools and hospitals around the country. Ten years later SA could find itself in a similar position, but this time around the ramifications would be worse given that the country is facing economic hardship after years of corruption and looting of the captured state.
If the unions go on strike many others could join the fray, turning it into something more than just a public sector shutdown. This would have a devastating effect on services around the country at a time when the ANC is trying to claw back support it lost in the 2016 local government elections.
It is also important that the proposal announced by Mboweni comes three months before the ANC goes to its NGC, which in the past has been a litmus test of the strength of a president in the party. Both Cosatu and President Cyril Ramaphosa could find themselves in a difficult political situation internally, especially when there is still a faction in the ANC that is determined to see the president fail.
Cosatu was one of the first ANC-aligned structures to endorse Ramaphosa’s bid to become president of the ANC. But if the government and unions are locked in a bitter battle come the NGC in July, it could become very difficult for him to drum up the same level of support.
Cosatu’s parliamentary coordinator, Matthew Parks, has already raised this, saying: “We are the ones defending him while people in Luthuli House and the ANC are sabotaging him. It doesn’t help us when the government does not reciprocate that support. Our support is not a blank cheque.”
It remains to be seen whether Ramaphosa can hold the line and resist having to capitulate in the face of mounting pressure from Cosatu. According to Mboweni, the proposal has the backing of the president and his fellow cabinet ministers, and he seemed confident on Wednesday that the unions and government would “find each other” on the issue.
But it will be difficult for Cosatu to back down just because it has ties with the ANC-led government. Saftu and its unions have nothing to lose, so they can truly “go to war”. If Cosatu blinks first its credibility in the eyes of workers will be directly threatened.
In the end this will be a huge test for both Ramaphosa and Cosatu. Mboweni has drawn a line in the sand, and one or the other will have to cross it.
For Cosatu it will be a test of how far its support for Ramaphosa can stretch, as its leaders have already exposed themselves politically with their plans to help save state-owned enterprises, Eskom in particular, using state employee pension money. If Cosatu puts country ahead of the members it represents, it will be placed in the unenviable position where detractors can accuse the federation of reverting to what it was during former president Jacob Zuma’s administration: a lapdog to the ANC.
There are no easy decisions in this saga, and Mboweni’s budget speech introduced the first few of many. But more than just Ramaphosa’s and Cosatu’s credibility is on the line: in the words of James Carville, this is about “the economy, stupid”. If GDP does not start growing meaningfully soon, the constituency that politicians will have to worry about is the unemployed.
The hard choices cannot be postponed any further.
IT WILL BE DIFFICULT FOR COSATU TO BACK DOWN JUST BECAUSE IT HAS TIES WITH THE ANC. SAFTU HAS NOTHING TO LOSE, SO IT CAN ‘GO TO WAR’