From trade-offs to take-it-or-leave-it
Unions gear up for another fight as government sticks to its guns
The budget, as National Treasury director-general Ismail Momoniat reminded journalists at the budget media conference, is all about dealing with infinite competing demands for a finite amount of funds.
One of the most significant of those demands, minister of finance Enoch Godongwana reminded us during his budget speech in parliament, is the social wage. Over the medium term more than 60% of noninterest expenditure goes to this expense. Unlike the economic wage, the social wage is provided by the government and has involved a steadily rising contribution to improving the living conditions of working people and their families. It includes expenditure on education, health services, social development, public transport, housing and local amenities.
“This is not an austerity budget,” the minister told parliament. “It is a budget that makes tough trade-offs in the interests of the country’s short- and long-term prosperity.”
Another of those significant demands is the remuneration of government employees.
And it turns out, one of the trade-offs was the Treasury’s decision to stick with the 3% increase in the public sector wage, continuing to ignore union demands for a rise of 10%, which is substantially above inflation.
Even with this restraint, the public sector wage bill is set to grow to a jawdropping R760.6bn by 2025/2026. It is, as Godongwana said, one of the government’s significant cost drivers.
The 3% increase for the 2022/2023 fiscal year will add R15bn to the wage bill, taking it up to R690.4bn. That bill will include additional funding for safety and security employees as well as those in education and health.
The low increase is expected to trigger a strike by public sector workers. Earlier in the week some of the biggest unions in the sector said they planned to launch the seven-day notice period of a strike on budget day.
The current dispute between the government and its employees started in 2020, when the government unilaterally pulled out of a three-year agreement. A new agreement was reached, which included a R1,000 cash payment.
The 2022/2023 wage negotiations deadlocked, with the government sticking to 3% plus the R1,000, which it said amounted to a 7% increase.
In his speech to parliament, Godongwana said the budget figures do not pre-empt the outcome of the wage negotiations that have just started. “Nevertheless, this and future wage negotiations must strike a balance between fair pay, fiscal sustainability and the need for additional staff in frontline services.”
Being forced to increase wages above the 3% provided for in the budget would require significant trade-offs in government spending. It means funds would have to be clawed back from elsewhere. The minister doesn’t mention the social wage or the social grants that millions of South Africans rely on, but it’s difficult not to assume that’s where some funds would come from.
The unions have already begun legal action against the government because it has suspended the R1,000 cash payment, effective end-March. However, Godongwana told journalists at a media briefing ahead of the budget that in terms of the arrangement with the unions, the R1,000 payment was made only if no agreement was reached during the wage negotiations.
“Wage negotiations began on February 17 for the 2023 year. We’re still negotiating, so there is no basis on which to say there’s no agreement.” The minister said if no agreement was reached the cash payment would be paid.
According to the Budget Review, the Treasury is working on a longer-term plan with the department of public service & administration and other national departments with a view to implementing a single remuneration framework. That framework would be aligned with principles of fair, equitable and sustainable remuneration in the public sector.
Whether this would reduce tensions between the Treasury and the unions is another matter.