The 2020/2021 budget speech delivered by finance minister Tito Mboweni in February has, like most other plans, been upended by the Covid-19 pandemic. In just a little more than a month he will unveil fresh plans for the government to finance the emergency budget to save lives and livelihoods during and after coronavirus.
Among other things, in the February speech Mboweni proposed cutting the public service wage bill by about R160bn over the medium term. He went on to say that “the employer has tabled an agenda item on the management of the public service wage bill at the Public Service Co-ordinating Bargaining Council ... the focus is to discuss containment of costs in the final phase of implementation of the current wage agreement. We aim to save R37.8bn in the next financial year.”
Unsurprisingly, this euphemism for a cut in the wage bill struck a raw nerve with the ANC’s labour allies, especially the public sector union affiliates of Cosatu, which accused Mboweni of jumping the gun and negotiating in public with them.
In October 2019 figures released by the Treasury showed that the public sector employed almost 30,000 people earning more than R1m a year. That number of exceptionally well rewarded public servants had more than doubled since 2006/2007 when Jacob Zuma defeated Thabo Mbeki at the ANC’s national conference in Polokwane.
In a country with high income inequality and deep poverty, it is remarkable that the servants of the people, including elected officials, should earn so much. Since ousting Zuma in 2018, President Cyril Ramaphosa has promised to reconfigure the shape and size of the state. Yet thanks to factional pressures within the ANC the cabinet’s structure has remained largely unchanged.
As the money man, Mboweni does not really have to face the militant public sector unions that now form the base of a weakened Cosatu. His likeable colleague, public service & administration minister Senzo Mchunu, is the one who has the thankless task of having to negotiate these cuts with the unions — a year before the 2021 municipal elections.
Mchunu won’t be the first to try to cut the size of the civil service. His predecessors made attempts and achieved little. He has spoken of modest measures such as offering voluntary severance packages, especially for employees of advanced age, and freezing vacant posts. But this is a blunt tool to effect a headcount reduction: only the most talented employees with better-than-average career prospects tend to opt for them, leaving behind the lifers and dead wood.
However, Mchunu may yet succeed where his predecessors failed. Covid-19 has changed many assumptions, and he should seize the opportunity to demand salary cuts, especially among the top earners, and freeze all increases for the next three years. This is also an ideal time to discuss the other elephant in the room: productivity among those fortunate few who still have jobs in this environment. This is possible to achieve, but won’t be easy, and will require that Mchunu’s boss, Ramaphosa, starts spending his political capital.
As part of their contribution to the Solidarity Fund, a multibillion-rand kitty seeded by the government for donations from individuals and charitable foundations, the cabinet and top civil servants have agreed to donate a third of their salary to the fund for three months. The proceeds of the fund are used to buy protective gear for health workers. These cuts should be made permanent, and the next lower salary bands, particularly the managerial class, must be asked to make a sacrifice too in a gesture of solidarity. The lower rungs must agree to a freeze for the next fiscal year.
The same approach should be adopted by the state-owned enterprises that have been mollycoddled by fiscal bailouts. Many private sector employers have cut salaries and some have had to close their doors, throwing thousands of workers onto the streets to join the 55%-odd of unemployed youths. Except for the upper echelons and office bearers, the government has not done enough.
If nothing changes in this country, the post-Covid-19 SA is a frightening spectre of sociopolitical instability. The virus has given South Africans, and the world, a glimpse of the deep-seated faultlines in society, which are likely to get worse after the virus has run its course.
The commendable public-private sector solidarity shown during the crisis has to continue beyond this phase. Most large businesses have hitherto resisted the temptation to lay off workers en masse. This has to continue, especially with the government’s concession to hasten the reopening of large swathes of the economy before the end of May.
Similarly, private and publicly owned large businesses should consider deeper cuts to their top earners’ salaries during this period, and those that have already effected temporary compensation cuts should keep them for the next three years while the country digs itself out of the crisis.
These are not easy measures to implement. But they have to be implemented if SA is to survive the coronavirus havoc. For this to happen, leadership is required.
• Dludlu, a former Sowetan editor, is executive for strategy and public affairs at the Small Business Institute.
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