Battle to cut wage bill
INTRANSIGENT: PAY CUTS, FREEZES ARE OFF THE TABLE – UNIONS
Labour costs equate to 35.4% of national spending.
President Cyril Ramaphosa’s ambitions of trimming the state’s wage bill to get the nation’s shaky finances under control have run into opposition from the outset.
In his 13 February State of the Nation address, Ramaphosa warned the government’s current debt was heading towards unsustainable levels and that Finance Minister Tito Mboweni would unveil details of plans to cut costs in his 26 February budget speech. The government is engaging with unions on how to contain labour costs, which equate to 35.4% of national spending, he said.
The state has proposed cutting 30 000 jobs and freezing pay for three years, according to Sizwe Pamla, a spokesperson for the Congress of South African Trade Unions.
Such measures are not washing with the unions that represent more than three-quarters of state workers.
“Just because we’re talking doesn’t mean we’re on the same page,” Pamla said. “Government has a right to engage with its employees, but government doesn’t have the right to its own slaves.”
The National Education, Health and Allied Workers Union said proposals to cut wages haven’t entered the bargaining council, where such issues are negotiated and a prevailing three-year wage agreement that expires next year is “sacrosanct and not open for review”.
Any attempt to predetermine the outcome of a new pay deal would be improper and would show that the government doesn’t take its workers’ concerns seriously, said Lufuno Mulaudzi, president of the Public Servants Association.
“We are not going to accept anything that will lead to wage cuts and if the minister makes pronouncements in that regard, he’ll be in for a big fight,” Mulaudzi said. “We’ll make sure we take our members to the streets of the country to make sure that services to the people are disrupted.”
While Treasury has also already announced R50 billion in spending cuts by 2022 to plug a widening budget gap, it needs to find another R150 billion of savings to meets its goal of achieving a primary balance by 2023.
Payroll costs are an obvious target because they’ve grown faster than any other spending category other than interest costs since 2007.
Cosatu and other unions have called for the government to bolster state coffers by recouping billions of rands that were looted during former president Jacob Zuma’s tenure, and reducing perks for Cabinet ministers, lawmakers and senior officials.
“No one will be holding their breath that the wage bill will actually come down,” said Chris Veegh, chief investment officer at 10X Investments. “The government has poor form in this regard and tends to cave in under pressure.” – Bloomberg