As is frequently the case, it is the cock-up theory rather than the conspiracy one that best explains why the government thought it was on solid ground to announce in the budget that the cuts to the wage bill it had only referred to theoretically before will now begin immediately.
In terms of the proposal, instead of the percentage increase in the consumer price index (CPI) plus half a percentage point, and the single point or so notch increase that was expected on April 1, state employees will receive the CPI increase minus three points, or wage growth of 1.5% in nominal terms. Trade unions, which learnt only the day before the budget that this would be the plan, were blindsided and unsurprisingly full of war talk.
While the Treasury had, for at the least the past year, signalled that slowing down the growth of the wage bill was its chosen route to rein in the budget deficit and debt, it had also explicitly said such changes were not envisaged before the start of the next three-year wage agreement, which takes effect in 2021. This explains why so little effort was put into meeting the unions between the October medium-term budget policy statement and last week’s budget.
Only one major meeting was held with trade union federation Cosatu, in December. At this meeting, which was really a political meeting as it has no standing in the bargaining process, the Treasury, department of public service & administration and its minister, Senzo Mchunu, met with members of Cosatu affiliates in the public sector.
Crucially, the proposal to reopen the three-year agreement was not broached. Options for slowing the growth of the wage bill were presented in the form of scenarios, but not as definite proposals.
There were a few other meetings involving Mchunu and Cosatu officials, best described as “talks about talks”. More recently, Mchunu and Treasury director-general Dondo Mogajane had meetings with the leadership of the other federations, again not making any firm proposal.
Most shocking of all was that when President Cyril Ramaphosa dropped in to Cosatu’s central executive meeting last Monday, taking with him Mchunu and deputy finance minister David Masondo, none of the three gave any hint of the bombshell that would drop two days later.
Finance minister Tito Mboweni, who learnt of Cosatu’s anger from journalists on the day of the budget, was visibly shocked to discover that unions believed they had been blindsided. He asked Masondo to answer a question about the consultation process, and he mumbled something evasive.
The bungled political process has set the tone for an adversarial engagement. Even though it was due to incompetent political management rather than a cynical plot to take labour by surprise, the way things unfolded are a blow to trust, the essential ingredient in a wage negotiation.
The second difficulty the government has in making this deal is that the sacrifice it is asking state employees to make is manifestly unfair on the face of it. Because it has not cracked down on corruption and waste, or reduced the size and cost of the executive, and because salaries for public representatives, though frozen, are very generous, it has no moral high ground to stand on.
While it is clearly the case that the least painful way for the country as a whole to bring public finances under control is to slow growth of the wage bill, this does not make it reasonable to public servants.
Even deeper cuts than already proposed to goods and services and infrastructure spending, or increased taxes, would have far more serious implications both for service delivery and economic growth.
Though public servants have enjoyed healthy wage growth over the years, unlike most in the private sector, the lion’s share of the jump in pay over the past 12 years comes from what were called occupational special dispensations — structural adjustments for nurses, teachers, doctors and so on. Most public servants are in education and health services and are not overpaid.
The real fat in the public sector sits elsewhere, outside the ambit of the bargaining unit, in management and admin jobs and in state-owned enterprises. From the point of view of the country’s finances, the sooner and bigger the first cut to the wage bill the less will need to be trimmed in years to come. In the Treasury’s scenario, wage growth will be 1.5% in 2020 and 4.5% and 4.4% in the two years thereafter, probably keeping pace with inflation.
In financial terms it is therefore a well thought out proposal, given the benefits that would flow for the country. But in political terms, for union leaders — who unlike ANC politicians are held strongly accountable by union members — it is far from being a viable proposition in this politically fraught environment.
• Paton is editor at large.
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