On February 22, Finance Minister Enoch Godongwana touched on some of South Africa’s labour issues. First, one needs to understand that our country is in a perilous state. Money is tight, state-owned enterprises are bankrupt and government departments are desperately low on finance and functionality. Most of this is because of theft, cadre deployment and corruption.
Godongwana said “households are under pressure from the rising cost of living, and unemployment remains stubbornly high”. At least there is an acknowledgement that unemployment is probably one of our biggest issues arising out of state capture. Unemployment is now much worse than at the dawn of our democracy.
One of the biggest issues facing us is the public sector wages. This issue is probably the biggest expenditure government has to face. This is an unknown figure. You might recall that Employment and Labour Minister Thulas Nxesi was facing a demand of a 6% wage increase from public sector unions. Minister Nxesi then in his high-handed fashion unilaterally implemented a 3% increase.
This unilateral implementation was a slap in the face to the trade union movement and caused enormous indignation. The tolerance shown by the trade union leaders was enormous. Although we still face a possibility of a massive strike, the fact that the trade union movement leadership managed to hold off the strike until now is almost a miracle.
Bearing in mind that this unilateral implementation of 3% has taken place, the minister of finance seems to have got it all wrong. He stated as follows: “As for the wage negotiations that just commenced, the Budget does not pre-empt the outcomes. Nevertheless, this and future wage negotiations must strike a balance between fair pay, fiscal sustainability, and the need for additional staff in front-line services.
“An un-budgeted wage settlement will require very significant trade-offs in government spending because the wage bill is a significant cost driver. It will mean that funds must be clawed back in other ways. Mainly, this will mean restricting the ability of departments and entities to fill non-critical posts. It will also mean achieving cost savings from the major rationalisation of state entities and programmes.”
In essence, the minister of finance is completely wrong with regard to the fact. Wage negotiations are very far down the road and seemingly ended by the labour minister’s unilaterally implementing the 3% wage increase.
Furthermore, this is not just a rational exercise where the government tries to strike a balance between fair pay and financial sustainability. In essence, the government is very reliant on the support of the trade union movement in the elections destined to be held in mid-2024.
The government is fully aware and the minister is cognisant of the fact that should the trade unions become so angry that they embark upon a strike, there is a possibility, even a probability, that the trade union movement will not support the ANC in the forthcoming elections. These elections will probably drive the government to cave into the wage demands.
You can well imagine that a 6% increase to the civil service will mean that state-owned enterprises will be even more dysfunctional and service delivery will be reduced to almost nothing. One can very well say goodbye to the filling of non-critical posts.
Hopefully there will be many closures of public entities that are dysfunctional and are used to wasteful expenditure. We are on the cusp of a government collapse. The fact that they will probably agree to a 6% increase shows that the current government will do just about anything to get more votes. Even so far as to bankrupt themselves.
* Michael Bagraim.
** The views expressed here are not necessarily those of Independent Media.
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