After a pre-wage negotiation briefing by the National Treasury, public sector unions said they will press their case for higher wages with cost-of-living projections for workers at the Public Service Co-ordinating Bargaining Council (PSBC) meeting on Friday.
The unions said their members are facing greater economic hardship, citing rising interest rates and accelerating inflation that is driving up food and transport costs.
The reaction from the unions comes after a presentation by Treasury official in the budget office Marumo Maake at a special meeting of the PSBC last Friday. Maake said alignment in the financial year 2023/2024 is critical and that higher wage agreements will pose a significant risk to the fiscal framework.
Fedusa public sector negotiator Reuben Maleka said the Treasury was expected to speak about fiscal consolidation amid the unfavourable global and domestic economic outlook.
Maleka said the issues around large spending pressures faced by the government and the risk of higher-than-budgeted public service wages were not new and were a policy position stated by the employer ahead of negotiations.
He said the unions will respond on April 29 with their analysis of the economy.
Clarity
Maleka said the government and the unions need to come to an agreement before June 30 so the unions can start negotiations for the next financial year in order for their demands to be included in the maiden budget later this year.
Cosatu head negotiator Itumeleng Molatlhegi said unions have asked the Treasury for clarity on SA’s debt situation.
“Treasury says it can’t afford more debt but they should ask, what brought about the indebtedness? Was it the overspending on employees or the mismanagement of funds, corruption, inadequacies in the system? We have sought clarity on this and want the Treasury to articulate what encompasses total debt,” Molatlhegi said.
According to the 2022 Budget Review, the country’s public sector wage bill accounts for the biggest share of consolidated expenditure in 2022/2023. The above-inflation wage bill has contributed to the widening gap between revenue and expenditure, increasing pressure on basic service delivery. The consolidated wage bill is projected to grow by an annual average of 1.8% over the medium term.
The state’s headcount and remuneration drives its wage bill. From 2006/2007 to 2019/ 2020 the number of state workers grew by 16% before the Covid-19 pandemic and 17% in 2020/2021. This raised the wage bill by R53bn.
Maake said government debt has skyrocketed from just more than R600bn in 2008 to a projected R4.35-trillion in the 2021/2022 fiscal year, a scenario that would push the country’s debt-to-GDP ratio — a main measure of financial health watched by ratings agencies — and consume an increasing share of revenue.
Earlier this month, Moody’s Investors Service changed the outlook on SA from negative to stable. The investor service said the key driver behind the decision to change the outlook to stable was the country’s improved fiscal outlook that raises the likelihood of the government’s debt burden stabilising over the medium term.
The agency said over the past two fiscal years, the government had shown it was able to reprioritise its spending while staying committed to fiscal consolidation, which the agency said it expected will remain the case.
Moody’s congratulated the SA government for managing to limit the growth of its wage bill to 1.6%, well below inflation.
Molatlhegi told Business Day that this does not preclude unions from speaking on behalf of labour. He said workers cannot go another year without an increase above the nominal inflation rate of 5.9%.
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