Trade union federation Cosatu has labeled the 2020 Budget “provocative”, saying that instead of a clear diagnosis of the problems facing SA, National Treasury attempted to “dump the bill for industrial-scale looting on public servants”.
A key item in the Budget was a proposal to cut the state’s wage bill by R160.2 billion over three years. Treasury proposed cuts of R37.8 billion in 2020/21, R54.9 billion in 2021/22 and R67.5 billion in 2022/23.
Mboweni denied he was presenting an “austerity” Budget, however, telling reporters that SA needs to “clean up our house”.
Treasury said the proposed wage cuts were due, in part, to ever-rising debt repayment costs and lower-than-expected tax revenues. Payments on debt interest costs account for 15 cents out of every R1 that South Africans pay in taxes.
Some form of cut to the state’s wage bill was largely anticipated by analysts, who noted ahead of the Budget that the state had struggled to reduce spending by other means to stop the gap caused by weaker tax revenues.
In its Budget Review, Treasury said civil servants’ salaries had grown by 40% in real terms over the past 12 years, “without equivalent increases in productivity”.
But Cosatu said that the “feeble and inflammatory budget” contained a clear message to workers: “The battle lines are drawn and the attempts to shift the burden of the crisis to them is in full swing”.
“Cosatu finds the government’s continuous attacks on public servants silly and tiresome. Little recognition is given to the conditions facing public servants, like being overworked and underpaid,” it said in a post-Budget statement.
“These public servants support, on average, seven unemployed extended family members. The fixation with the wage bill is nonsensical when considering the fact that it has been stable for the past 10 years at 35% of the government consolidated expenditure, in line with international standards.”
In a meeting with reporters before his address, Mboweni said he had the support of his Cabinet colleagues in the proposal to cut the bill.
Deputy Minister of Finance, Dr. David Masondo, meanwhile, said the government had already met with unions at a number of informal discussions to explain its thinking.
Masondo said that at these conversations the state argued that a 2018 wage agreement for public sector workers, which included above-inflation increases, had had a “huge impact on our ability to employ more workers”.
He added he had “faith” the two sides would find each other.
Cosatu, meanwhile, said that to stabilize its finances the state could first reduce “bloated executive and management posts and perks,” eradicate ghost posts and cut wages of ministers, among other interventions.
“The president’s decision to freeze salaries for Ministers does not go far enough. It is poor leadership of politicians that led us into this crisis. They must lose their exorbitant salaries and perks.”
“Workers will not play victims and the government can rest assured that they will demand and not beg for what is due to them. Cosatu remains battle-ready to push back against this public service cuts agenda.”
The trade union federation earlier threatened to strike and “collapse” the public service if the government did not honor the current public service wage agreement, in terms of which salaries are due to increase up to 7%, or CPI+ 1%, on April 1, depending on job grade.
The federation – which is one of the ruling ANC’s alliance partners – on Tuesday said it would “part ways” with government should the wage freeze go ahead.