Government-union showdown over salary increases headed for more talks

The government has asked unions to postpone the long-awaited court case on wage increases for public sector workers until after February 1, saying it wants to work towards a settlement.

This is according to Business Day.

The court case is set to be heard by the Labour Appeal Court on Wednesday.

The unions, including the Public Servants Association, are asking the court to enforce the final year of a multi-term wage agreement they entered into with the government.

The DA's Leon Schreiber said the decision taken by the department of public service & administration, through the state attorney, to halt court proceedings before the labour court on the freeze applied to the state wage bill by finance minister Tito Mboweni and instead work towards a settlement with unions, “signals the beginning of the end of the government’s halfhearted effort to reduce the out-of-control wage bill”.

“As a result of the ANC’s desire to hang onto political power at all costs, SA is now hurtling towards a budget blowout and a fiscal crisis from which we may not recover for at least a generation,” he said.

The opposition MP said “the ANC has chosen to appease these cadres and unionists because Cosatu had threatened to withdraw its support to the ANC during the 2021 local government election if the ANC implemented Mboweni’s plan”.

“South Africans will now pay a heavy price from the resultant collapse in service delivery, as the ANC government moves to slash budgets from essential services in order to fund the expected wage settlement.”

Organised business recently released a report benchmarking SA’s bloated public sector wage bill against international norms.

Sunday Times reported that Business Unity SA (Busa) warned that SA was “well on its way to becoming another failed African state” if it didn’t tackle the wage bill.

The report shows that between fiscal 2006 and 2018, the wage bill exploded from R154bn to R518bn — a compound annual average growth rate of 10.5% — almost entirely due to outsize wage increases.

As a share of state spending, SA has the worst score of the 46 countries surveyed, with more than 35% of the budget devoted to paying salaries, a third higher than the international average of 26.1%. And at 11.6% of GDP, SA’s wage bill was about 25% higher than the global norm of 9.4% in 2017.

Busa wants the social partners to hold an urgent debate on the wage bill, saying it has become a “critical impediment” to SA’s economic recovery.

In October, finance minister Tito Mboweni proposed a public sector “wage freeze” for the next three years.

Mboweni made the announcement in parliament as he tabled the National Treasury's 2020 medium-term budget policy statement (MTBPS), telling MPs that the public sector wage bill has risen by 51% since 2008.

This has resulted in 1.3 million government employees in national and provincial departments earning R567bn in salaries and other benefits by the end of March 2020.

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