SA’s government is in line for tough wage negotiations later this year, as finance minister Tito Mboweni doubled down on cuts to the public sector wage bill, warning that there were more to come.
In his adjustment budget speech on Wednesday Mboweni briefly touched on the bloated wage bill, which has been in severe dispute since cuts were announced during the budget speech in February without organised labour having been brought on board.
The decision not to implement the final year of a multi-term wage agreement which comes to an end this financial year is already subject to a court challenge and arbitration. No salaries have been increased since the onset of the final year in April.
Addressing the wage bill, Mboweni said nearly half of all consolidated revenue this year will go towards the compensation of workers in the public sphere.
“We value the important work public servants do,” Mboweni said, adding that public service & administration minister Senzo Mchunu was negotiating with organised labour to “find a balanced solution that sets compensation at an appropriate, affordable and fair level”.
The supplementary Budget Review said the cabinet has reiterated support for the proposed public service wage bill reductions announced in February, which will improve the composition of spending.
The Budget Review said the expenditure was projected to peak at 37.2% of GDP in 2020/2021. It said over the medium term, main budget non-interest expenditure was expected to decrease as a share of GDP.
The review said spending reductions amounting to about R230bn are required in 2021/2022 and 2022/2023, followed by further reductions in 2023/2024.
These measures come in addition to proposed medium-term reductions of R160.2bn to the public service wage bill set out in the 2020 budget, which are yet to be finalised.
“Failure to achieve these reductions will require larger reductions to wages and other spending areas in the outer years of the spending framework, and higher revenue increase,” the Budget Review said.
Mugwena Maluleke, chief negotiator for Cosatu’s public sector unions — excluding the National Education, Health and Allied Workers Union (Nehawu) — said it was clear from the comments made that wages will be set at an appropriate level and that the government, which has said that the wage bill is too big, is not likely to make additional funds available when negotiating the next wage agreement. This is set to start this year, as the public servants are in the final year of their current agreement.
He said the negotiations are set to be messy, as the budget has opened up the door for retrenchments. He said the warning was clear — if cuts are not made now, more cuts will come.
“It is as bad as I expected it to be, as it’s beginning to introduce job losses,” Maluleke said about the budget.
He said even if the government did not spell out the implication of possible retrenchments, his view was that it was implicit in what was said. He said the coming public sector negotiations would mean that unions will not only have to deal with wages but also with possible job losses in the public sector.
Reuben Maleka, assistant GM of the Public Servants Association (PSA), said there were “serious expectations that in the coming outer years we must sacrifice”. But he added that the cuts will have to be fought in the boardroom to deliver on their members’ expectations.
He said the reiteration of the February budget showed that the government was not willing to revise the budget to accommodate the 2018 wage agreement.
He said the PSA had a serious problem with this, given the court challenge it has brought against government’s decision not to implement the wage agreement. “If the court agrees with us, then that’s where there’s going to be a tailspin as government has made no provision for it,” Maleka said.
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