Several state companies and municipalities are scrambling to find money to pay salaries – and unions are not happy about it, reports the City Press.
From the 3,700 Denel employees who were paid only 85% of their salaries after a long delay, to municipalities that are yet to pay employees for May and June, South Africa’s state institutions and provincial structures are in trouble.
According to the City Press, pay insecurity has hit the likes of Denel, Metrorail, Prasa and the the SABC.
And citing a report from the SA Municipal Workers’ Union (Samwu), presented to Cooperative Governance and Traditional Affairs Minister Nkosazana Dlamini-Zuma on June 21, the paper further highlighted 30 municipalities in the country where employees were not being paid, due to lack of funds.
For example, employees at the Amahlati municipality in the Eastern Cape have not yet received their salaries for May or June, the paper said, reporting that employees there were last paid in April.
The 30 municipalities were spread across the country – found in every province except the Western Cape – with Samwu threatening strike action if the problem is not resolved by the end of June.
Shocking state of municipalities
Pay issues do not come as a surprise given the latest audit report on the state of municipalities in South Africa.
The latest report from the auditor general showed a shocking decline in the state of the country’s municipalities over the last year, where local government role players were slow in implementing, or completely disregarded, the audit office’s previous recommendations for improvement.
The AG audited 257 municipalities and 21 municipal entities for the 2017-18 financial year. Of the audited municipalities, the audit outcomes of 63 regressed while those of 22 improved.
Only 18 municipalities managed to produce quality financial statements and performance reports, as well as complied with all key legislation, thereby receiving a clean audit.
This is a regression from the 33 municipalities that received clean audits in the previous year.
Not only did the unqualified opinions on the financial statements decrease from 61% to 51%, but the quality of the financial statements provided for auditing was even worse than before, the AG said.
“Only 19% of the municipalities could give us financial statements without material misstatements,” he said.
A large portion of South Africa’s state companies are currently heavily reliant on the state for bailouts.
The SABC is currently waiting on government approval of a R3.2 billion bailout, which will allow the broadcaster to continue operations. However, there are serious doubts over whether government can spare the funds.
So far, the SABC has used whatever money it could find to pay salaries, but this has led to shortfalls in payments in other areas. Earlier in June, the group’s chief financial officer Yolande van Biljon warned that the broadcaster could be forced off the air if debtors came knocking.
In April, the government was forced to pay out funds to Eskom early due to financial distress at the power utility. It is expected to receive further financial support from government, following a R69 billion guaranteed pledge from the government over the next three years.
South African Airways also received a bailout from the government in 2018 – however, support for the airline has since dried up, which was cited by former chief executive officer, Vuyana Jarana as one of the reasons for his exit.
SAA needed over R21 billion from government to fully implement its turnaround strategy. At the start of the year, it was forced to secure funding from other sources to keep operating, due to lack of government support.