Cosatu has warned the government that it will have “egg on its face” for wanting to cut the public sector wage bill, saying its behaviour in the saga was worse than the apartheid government's.
Cosatu's stance will test President Cyril Ramaphosa's determination to rein in public spending, which has pushed the budget deficit to its highest level since the 1992/1993, jacked up state borrowings and left SA's remaining investment-grade credit rating by Moody's Investors Service hanging by a thread.
The cuts envisage an immediate reopening of the three-year wage agreement currently in force and a settlement of the prevailing consumer price index minus 3% for 2020.
In his budget speech on Wednesday, finance minister Tito Mboweni said the government had tabled a proposal at the Public Service Co-ordinating Bargaining Council (PSCBC) to discuss the “containment of costs in the final phase of the current wage agreement”.
“We aim to save R37.8bn in the next financial year. There is more than one way in which this goal can be achieved,” said Mboweni, adding that organised labour understood where the government was coming from, and that labour had made constructive proposals about a range of issues.
The plan is to cut the public-sector wage bill by R160bn over the next three years.
The government has been battling to contain its huge wage bill and spends about R600bn on salaries, representing 35% of its annual spending. A salary freeze has been put in place for all public representatives, including cabinet ministers and MPs.
A downgrade by Moody’s, which is due to review SA’s rating late in March, could be devastating for the country and could see the government’s financial situation deteriorate even further as the outflow of money from the country’s bonds markets pushes up borrowing costs, leaving even less cash available for key services such as health and education.
Ratings agency Fitch, which already rates SA at subinvestment grade with a negative outlook, said on Wednesday that the budget speech highlighted the “severe deterioration” of public finances and the long-term policy challenge of stabilising government debt.
Cosatu leaders, who briefed the media in Johannesburg on Thursday following the federation’s central executive committee meeting, described the proposal on the multiyear wage agreement as an “attack on collective bargaining”.
The final phase of the multiyear wage agreement signed in 2018 is due to be implemented on April 1, while the next round of public-sector wage negotiations is set to take place in the second half of 2020.
Cosatu general secretary Bheki Ntshalintshali said the proposal to freeze salaries was an attack on the PSCBC. He said it was also an attack on multiyear agreements and could lead to workers demanding one-year wage agreements in future.
Mike Shingange, the federation’s first deputy president, said this was a “mischievous proposal”, which was curiously tabled 20 days before the final phase of the multiyear wage agreement is supposed to come into effect.
“It undermines the principle of collective bargaining ... This was never done, even during apartheid — that a signed agreement is reneged upon. We can’t expect that from a democratic government,” he said.
The trade union federation backed Ramaphosa in his successful bid in 2017 to lead the ANC.
On the eve of the budget speech, Cosatu said any attempt by the government to freeze salary adjustments of public servants for 2020 and 2021 would count as a “declaration of war”.
Shingange said on Thursday that should the government go ahead and implement the proposal, “they will end [up] with egg on their face”.
He argued that the government was not confronted with a wage bill problem as its challenges were mainly administrative.
“We are going to prove to them that they have misdiagnosed the problem [of the wage bill].”
The Cosatu leaders implied the government was acting in bad faith on the matter.
“You can’t take a decision and say ‘let’s come and negotiate’. You discuss the proposal first and then announce on the outcomes. You don’t announce and prejudge what will happen during negotiations,” Ntshalintshali said.
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