South African president Cyril Ramaphosa\u2019s ambitions of trimming the state\u2019s wage bill to get the nation\u2019s shaky finances under control have run into opposition from the outset.<\/p>\n
In his Feb. 13 state-of-the-nation address, Ramaphosa warned that the government\u2019s current debt levels are heading toward unsustainable levels and finance minister Tito Mboweni will unveil details of plans to cut costs in his Feb. 26 budget speech.<\/p>\n
The government is engaging with unions on how it could contain labor costs, which equate to 35.4% of national spending, he said.<\/p>\n
The state has proposed cutting 30,000 jobs and freezing pay for three years, according to Sizwe Pamla, a spokesman for the Congress of South African Trade Unions, the nation\u2019s biggest labor group and a member of the country\u2019s ruling coalition.<\/p>\n
Such measures aren\u2019t washing with unions that represent more than three-quarters of state workers.<\/p>\n
\u201cJust because we\u2019re talking doesn\u2019t mean we\u2019re on the same page,\u201d Pamla said. \u201cGovernment has a right to engage with its employees, but government doesn\u2019t have the right to its own slaves.\u201d<\/p>\n
The National Education, Health and Allied Workers Union said proposals to cut wages haven\u2019t entered the bargaining council where such issues are negotiated, and a prevailing three-year wage agreement that expires next year is \u201csacrosanct and not open for review.\u201d<\/p>\n
Any attempt to predetermine the outcome of a new pay deal would be improper and show that the government doesn\u2019t take its workers\u2019 concerns seriously, said Lufuno Mulaudzi, president of the Public Servants Association.<\/p>\n
\u201cWe are not going to accept anything that will lead to wage cuts and if the minister makes pronouncements in that regard, he\u2019ll be in for a big fight,\u201d Mulaudzi said.<\/p>\n
\u201cWe\u2019ll make sure that we take our members to the streets of the country to make sure that services to the people are disrupted.\u201d<\/p>\n
While the Treasury has also already announced R50 billion ($3.4 billion) in spending cuts by 2022 to plug a widening budget gap, it needs to find another R150 billion of savings to meets its goal of achieving a primary balance by 2023.<\/p>\n
Payroll costs are an obvious target because they\u2019ve grown faster than any other spending category other than interest costs since 2007.<\/p>\n
Cosatu and other unions have called for the government to bolster state coffers by recouping billions of rand that were looted during former President Jacob Zuma\u2019s tenure, and reducing perks for cabinet ministers, lawmakers and senior officials.<\/p>\n
\u201cNo one will be holding their breath that the wage bill will actually come down,\u201d said Chris Eddy, head of investments at 10X Investments.<\/p>\n
\u201cThe government has poor form in this regard and tends to cave in under pressure.\u201d<\/p>\n