The SA Local Government Bargaining Council (SALGBC) has dismissed an application by the cash-strapped Tshwane metro to be exempted from implementing the last leg of a multiterm wage deal reached in the council in 2021.
The SALGBC is a platform for the employer and workers to agree on wages and other conditions of employment.
City spokesperson Selby Bokaba said the ruling was disappointing as the metro had presented “solid arguments” supported by evidence that the increases are unaffordable.
“The city’s financial position is exceptionally fragile and, as such, we embarked on an extensive cost-cutting exercise by reducing budgets by 30% across departments. It is worth noting that the panellist [SALGBC senior commissioner Eleanor Hambidge] acknowledges the city’s liquidity challenges, but in the same vein ordered the city to honour the collective agreement,” Bokaba said.
“In acknowledging the city’s precarious financial position, she [Hambidge] says the following: ‘Having applied my mind to the detailed application, it is abundantly clear that the applicant (City of Tshwane) is in financial distress with major liquidity problems, as borne out by National Treasury midterm recommendations; the Auditor-General report on the 2021/22 annual financial statements; and the Moody’s report which all clearly indicate that there are solvency issues with creditors not being paid’.”
Bokaba said it was shocking for the senior commissioner to dismiss the city’s exemption application.
“This ruling clearly provides grounds for review. The city will immediately begin the requisite work to approach the Labour Court on an urgent basis to review this ruling.”
In a 12-page arbitration award (ruling), dated September 10, which Business Day has seen, Hambidge dismissed the exemption application and directed Tshwane to comply with the wage deal with “immediate effect”.
The ruling comes as Tshwane employees, who are members of the SA Municipal Workers Union (Samwu) have been on strike since July 26, demanding that the metro implement a 5.4% wage increase, the last leg of a three-year wage agreement signed in the SALGBC in 2021. Inflation slowed to a two-year low of 4.7% in July, from 5.4% in June.
The city responded to the wage demand by saying it did not have the R600m needed to implement the pay deal and subsequently applied to the SALGBC for an exemption from implementing it.
The illegal strike action, which has seen more than 120 city employees fired, has turned violent with at least one employee shot at and city infrastructure vandalised and set on fire.
Tshwane executive mayor Cilliers Brink has said the metro cannot afford a salary increase this year as the city’s R46.9bn budget for the 2023/24 financial year was underfunded by at least R3bn.
In her ruling, Hambidge noted that the Tshwane metro had submitted that should it implement the final part of the pay deal, such conduct would be “unlawful because it will be in breach of the requirements of the Municipal Finance Management Act as there is no budgeting funding for the increase. According to the application for exemption, it was unable to budget for the 2023/24 increase because there is no funding to pay for it and consequently the applicant cannot afford it”.
However, Hambidge said Samwu had raised in its submission that the metro has made a provision for salary increases in 2023/24.
She noted that no reference was made to the actual budget provision which is R12.6bn, “and when compared to the actual expenditure for 2022/23 in an amount of R11.4bn, after the leave adjustment, there is a difference of R1.1bn, and accordingly it is fair to both the applicant/employer and the employees to conclude that sufficient provision has been made in the 2023/24 budget to cover the increase in an amount of R602m”.
“The applicant can no longer rely on the principle of legality when it is my finding that adequate provision has been made for the increase in the 2023/24 budget. I am further persuaded to decline this exemption application, as granting such has the potential to undermine centralised collective bargaining in this sector,” Hambidge ruled.
Samwu general secretary Dumisane Magagula said the union welcomed the decision to dismiss Tshwane’s “frivolous exemption application” and implored the metro management to “do the right thing and comply with the collective agreement and the SALGBC ruling”.
Samwu is the biggest local government union, representing about 160,000 of the country’s nearly 300,000 municipal workers. It is an affiliate of labour federation Cosatu, a key ally of the ANC.
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Bargaining council dismisses Tshwane metro’s wage exemption application
Capital city to approach the labour court on an urgent basis to review ruling
Image: DEAAN VIVIER/BEELD/GALLO IMAGES
The SA Local Government Bargaining Council (SALGBC) has dismissed an application by the cash-strapped Tshwane metro to be exempted from implementing the last leg of a multiterm wage deal reached in the council in 2021.
The SALGBC is a platform for the employer and workers to agree on wages and other conditions of employment.
City spokesperson Selby Bokaba said the ruling was disappointing as the metro had presented “solid arguments” supported by evidence that the increases are unaffordable.
“The city’s financial position is exceptionally fragile and, as such, we embarked on an extensive cost-cutting exercise by reducing budgets by 30% across departments. It is worth noting that the panellist [SALGBC senior commissioner Eleanor Hambidge] acknowledges the city’s liquidity challenges, but in the same vein ordered the city to honour the collective agreement,” Bokaba said.
“In acknowledging the city’s precarious financial position, she [Hambidge] says the following: ‘Having applied my mind to the detailed application, it is abundantly clear that the applicant (City of Tshwane) is in financial distress with major liquidity problems, as borne out by National Treasury midterm recommendations; the Auditor-General report on the 2021/22 annual financial statements; and the Moody’s report which all clearly indicate that there are solvency issues with creditors not being paid’.”
Bokaba said it was shocking for the senior commissioner to dismiss the city’s exemption application.
“This ruling clearly provides grounds for review. The city will immediately begin the requisite work to approach the Labour Court on an urgent basis to review this ruling.”
In a 12-page arbitration award (ruling), dated September 10, which Business Day has seen, Hambidge dismissed the exemption application and directed Tshwane to comply with the wage deal with “immediate effect”.
The ruling comes as Tshwane employees, who are members of the SA Municipal Workers Union (Samwu) have been on strike since July 26, demanding that the metro implement a 5.4% wage increase, the last leg of a three-year wage agreement signed in the SALGBC in 2021. Inflation slowed to a two-year low of 4.7% in July, from 5.4% in June.
The city responded to the wage demand by saying it did not have the R600m needed to implement the pay deal and subsequently applied to the SALGBC for an exemption from implementing it.
The illegal strike action, which has seen more than 120 city employees fired, has turned violent with at least one employee shot at and city infrastructure vandalised and set on fire.
Tshwane executive mayor Cilliers Brink has said the metro cannot afford a salary increase this year as the city’s R46.9bn budget for the 2023/24 financial year was underfunded by at least R3bn.
In her ruling, Hambidge noted that the Tshwane metro had submitted that should it implement the final part of the pay deal, such conduct would be “unlawful because it will be in breach of the requirements of the Municipal Finance Management Act as there is no budgeting funding for the increase. According to the application for exemption, it was unable to budget for the 2023/24 increase because there is no funding to pay for it and consequently the applicant cannot afford it”.
However, Hambidge said Samwu had raised in its submission that the metro has made a provision for salary increases in 2023/24.
She noted that no reference was made to the actual budget provision which is R12.6bn, “and when compared to the actual expenditure for 2022/23 in an amount of R11.4bn, after the leave adjustment, there is a difference of R1.1bn, and accordingly it is fair to both the applicant/employer and the employees to conclude that sufficient provision has been made in the 2023/24 budget to cover the increase in an amount of R602m”.
“The applicant can no longer rely on the principle of legality when it is my finding that adequate provision has been made for the increase in the 2023/24 budget. I am further persuaded to decline this exemption application, as granting such has the potential to undermine centralised collective bargaining in this sector,” Hambidge ruled.
Samwu general secretary Dumisane Magagula said the union welcomed the decision to dismiss Tshwane’s “frivolous exemption application” and implored the metro management to “do the right thing and comply with the collective agreement and the SALGBC ruling”.
Samwu is the biggest local government union, representing about 160,000 of the country’s nearly 300,000 municipal workers. It is an affiliate of labour federation Cosatu, a key ally of the ANC.
BusinessLIVE
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