President Cyril Ramaphosa has come to the defence of finance minister Tito Mboweni as unions bay for his blood over plans to cut the public-sector wage bill by more than R160bn over three years.
Mboweni has said he has the political support to push through the cuts, beginning with this year’s annual increase due to be implemented on April 1.
In their respective weekly newsletters on Monday, Ramaphosa and Business Leadership SA CEO Busi Mavuso rallied behind Mboweni, describing the budget he tabled in parliament last week as a "sobering assessment" of SA’s dire economic predicament and calling on labour to "come to the party" to deal with it.
Mboweni’s fiscal framework depends on the R160bn cut in the wage bill as well as another R100bn in expenditure cuts to baseline budgets, mostly of education, health and provincial and municipal programmes.
Without these spending reductions, the projected deficit, which rises to 6.8% in 2020, will be overshot.
‘Significant changes’
The government aims to save about R261bn over the next three years by cutting the budgets of several departments and reducing the rate at which the public service wage bill increases. This will be partially offset by setting aside R111bn for crisis-hit state-owned entities such as Eskom and SAA.
"The figures make it plain that unless we act now to turn things around, there will be even more difficult times ahead. Put simply, we are spending far more than we are earning," Ramaphosa said.
"We need to make significant changes and we need to make them now."
The president said the budget is an integral part of SA’s drive towards inclusive growth, job creation, investment and a capable state. They have made a deliberate decision not to pursue a path of austerity, he said, as such a route would have led to deep cuts in spending on the social services on which poor people rely.
"It could have involved dramatically reducing the salaries of civil servants, the size of the public service, cutting bonuses and pensions, raising taxes and selling off key state assets."
The president said that an austerity budget would have damaged "our growth prospects further and weakened the ability of the state to stimulate economic activity and meet people’s needs".
"We have instead presented a budget that contains a range of balanced and well-considered measures to contain spending, increase revenue and encourage growth," he said.
The presidential working committee on jobs met for its monthly meeting at the National Economic and Labour Council (Nedlac) on Monday.
The stakeholders, however, did not discuss the wage bill issue, instead referring it to the Public Service Co-ordinating Bargaining Council.
Cosatu has warned the government that it will have "egg on its face" for wanting to cut the wage bill, saying its behaviour in the saga has been worse than the apartheid government’s.
Cosatu’s stance will test Ramaphosa’s determination to rein in public spending, which has pushed the budget deficit to its highest level since 1992/ 1993, jacked up state borrowing and left a sword hanging over SA’s remaining investment-grade credit rating by Moody’s Investors Service.
In her defence of Mboweni on Monday, Mavuso criticised Cosatu for its "kneejerk response" on the wage bill issue, saying it was "all too predictable and rather unimaginative".
"Note that Mboweni never announced any job cuts but rather a review of the rate of wage increases.
"Considering the state of our economy, a more considered response, particularly from Cosatu, which after all is in alliance with the ruling party, would have been refreshing," she said.
"To be blunt," said Mavuso, "labour has to come to the party for us to escape our dire economic predicament."
"For the best part of a decade, workers in the private sector have borne the brunt of our economic struggle as companies have been forced to cut workforces while workers in the public sector, backed by their powerful unions, have been largely cushioned from its full effects."
In a statement on Monday, Cosatu general secretary Bheki Ntshalintshali described the cuts as an "offensive" against public sector workers, who he said were the backbone of service delivery.
The mismanagement of the public service and the economy is not the workers’ fault, and they are not responsible for the estimated R500bn lost to the state capture being investigated, Ntshalintshali said.
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