After five months of waiting, intense anxiety and uncertainty, the Constitutional Court will on Monday deliver its judgment on the government’s controversial decision to renege on aspects of the wage agreement reached with public sector unions in 2018.
In a document to the public sector co-ordinating bargaining council (PSCBC), which Business Day has seen, the court's registrar, Stephen Cindi, said that judgment would be handed down electronically and circulated to the parties’ legal representatives by email.
The unions — including the National Education Health and Allied Workers’ Union (Nehawu), SA Democratic Teachers’ Union (Sadtu), and the Public Servants Association of SA (PSA) — approached the top court in August 2021 to challenge the ruling by the Labour Appeal Court in 2020, upholding a Treasury decision not to implement the final part of a three-year public-sector wage deal due to lack of money.
The unions threatened to embark on industrial action. They told the Constitutional Court that the government could no longer be trusted to fulfil its contractual obligations and that the nonimplementation of the agreement jeopardised the bargaining process.
Implementing the final year of the three-year agreement would have cost R38bn while the government is trying to rein in public spending and slash the ballooning wage bill.
In his budget speech last week, finance minister Enoch Godongwana identified the financially distressed state-owned enterprises and the public service wage bill as among the “significant risks” to the fiscal framework.
Additional funding
He said compensation spending will increase from R665.1bn in 2021/2022 to R702bn in 2024/2025, at an average annual rate of 1.8%.
Godongwana said the government had allocated additional funding of R20.5bn in 2022/2023 to meet the cost implications of the 2021 public service wage agreement.
The wage deal reached in July 2021 included a 1.5% pay progression increase (an increase linked to years of service) and a nonpensionable monthly cash gratuity on a sliding scale of R1,220-R1,695 to ensure that all employees receive R1,000 after tax.
While the 1.5% pay progression is factored into budget projections for the next three years, the cash gratuity is not. In the absence of a new agreement, the same gratuity will be paid in 2022/2023, which is provided for in the 2022 budget.
The public service unions demanded a wage rise of the consumer price index plus 4% across the board for 2021/2022, but the government said there was no money.
Numerous attempts by the governing ANC to slash the wage bill have been met with fierce resistance by unions, which the ANC has relied on to win elections since 1994. With the 2024 national elections looming, and the ANC going to its national elective congress in December 2022, the governing party could be forced to pacify unions.
The wage bill has been increasing exponentially over the years, rising from R154bn in 2006/2007 to R518bn in 2018/2019. It increased to about R630bn in 2020/2021. The government’s proposed reductions to the wage bill, as highlighted in the 2021 Budget Review, amount to R303.4bn from 2020/2021 to 2023/2024.
Duplicate functions
PSA assistant general manager Reuben Maleka defended the wage bill, saying it was proportionate to the service required by the public. “Reducing the wage bill would in a way reduce the number of warm bodies which will cripple the services such as police, NPA, health, education, border management.... The government must ensure the three spheres of government and SOEs salaries are equalised,” said Maleka.
“Now on average CEOs of SOEs earn three times more than the DGs [directors-general] of departments and also municipal managers being on different salary scales. The government must consider removing duplicate functions created by having three spheres of government which are national, provincial and local spheres. Government must reconsider its proposal on the single public sector that will eliminate duplicated functions and fragmented salary dispensation.”
SA Federation of Trade Unions (Saftu) national spokesperson Trevor Shaku was emphatic that “nothing should be done to cut the wage bill”.
“Contrary to neoliberal economists and strategists who think it is crucial to deal with the public sector wage bill, Saftu asserts that it is crucial to deal with understaffing in the public sector. If public institutions are to operate efficiently in delivering services to the people, then understaffing must be dealt with decisively and urgently,” he said.
Saftu wants government to stop “scaremongering us into submissions by evoking some of its myths that the fiscus has spiralled out of control”.
“The consequence of [being] afraid of financial deficit, is [a] real deficit in society. Such a deficit manifest itself in [high] levels of crime and violence, shortage of skills, pauperised generation, avoidable deaths in hospitals, poor educational outcomes and high levels of dropout in schools, and mental health problems spiralling because social worker services are scarce…,” Shaku said, adding “this is the deficit we should be afraid of, not the financial one”.
Mugwena Maluleke, convener of the Cosatu public service unions, did not respond immediately to questions sent to him.
A public sector labour summit will take place from March 28 to March 30 for stakeholders to engage on issues aimed at “building a sustainable public service and remuneration guidelines”.
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