{"id":377523,"date":"2020-02-27T07:08:37","date_gmt":"2020-02-27T05:08:37","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=377523"},"modified":"2020-02-27T07:08:37","modified_gmt":"2020-02-27T05:08:37","slug":"unions-outraged-by-plans-to-pare-back-state-wage-bill","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/government\/377523\/unions-outraged-by-plans-to-pare-back-state-wage-bill\/","title":{"rendered":"Unions outraged by plans to pare back state wage bill"},"content":{"rendered":"

The credibility of South Africa\u2019s proposals to curb debt and save its sole investment-grade credit rating will be put to the test by powerful labor unions outraged by plans to pare back the wage bill.<\/p>\n

The government is seeking to backtrack on a three-year pay deal agreed with civil servants in 2018 and cut personnel spending by R37.8 billion ($2.5 billion) in the year through March 2021.<\/p>\n

The allocation for pay was also cut by R122.4 billion for the next two years to offset the effect of lower-than-expected economic growth and tax revenue, according to the budget review Finance Minister Tito Mboweni presented on Wednesday.<\/p>\n

While financial markets cheered the news, with the rand gaining as much as 0.8% against the dollar, the government\u2019s ability to hold firm against its 1.3 million state workers who\u2019ve consistently won inflation-beating increases is in doubt.<\/p>\n

The Congress of South African Trade Unions, the country\u2019s largest labor group, is a member of the ruling coalition and President Cyril Ramaphosa is indebted to it for helping him win control of the ruling party in late 2017.<\/p>\n

\u201cThe budget is dependent on significant wage cuts,\u201d said Investec Asset Management analysts Nazmeera Moola and Sisamkele Kobus. \u201cThere is absolutely no agreement with unions to achieve this, so at best this is a negotiating tactic.\u201d<\/p>\n

The budget lays bare the need for the government to curb expenditure.<\/p>\n

The economy is set to expand an average of just 1.2% a year through 2022, and the budget deficit is projected to reach 6.8% of gross domestic product in the year through March 2021 — the highest since before apartheid ended in 1994. The state wage bill has surged 40% more than inflation over the past 12 years, and accounts for more than a third of total government spending.<\/p>\n

The government isn\u2019t planning to cut or reduce wages, according to Dondo Mogajane, the Treasury\u2019s director-general. It\u2019s proposing a 1.5% increase for the coming year and 4.5% in each of the next two years, he said, adding union concerns will be taken into account.<\/p>\n

\u201cWe are opening up and saying \u2018there are no holy cows here, let\u2019s talk,\u2019\u201d Mogajane said in an interview. \u201cThe budget deficit is not going to be 6.8%, it\u2019s going to be around 7% or right up to 8% if we factor out the wage proposal. We are prepared to open the conversation with labor to ask what else to cut.\u201d<\/p>\n

Mboweni conceded that difficult discussions with the unions lay ahead but expressed confidence that \u201cwe will be able to find each other.\u201d<\/p>\n

\"\"<\/a><\/p>\n

Worst in a Generation<\/strong><\/p>\n

Cosatu was less conciliatory, accusing the government of trying to force workers to bear the brunt of years of economic mismanagement and unchecked graft.<\/p>\n

\u201cThe way the state has gone about notifying the workers is in extremely bad faith and dangerous,\u201d said Matthew Parks, the federation\u2019s parliamentary officer. \u201cIt causes anxiety among our members and collapses the space to engage.\u201d<\/p>\n

Civil servants last staged a strike in 2010 that dragged on for three weeks before they were awarded an inflation-beating 7.5% raise.<\/p>\n

\u201cThe real issue from the budget seems to be the difficult times that lie ahead with very muted economic growth and a lot of cost-cutting, especially with the public sector wage bill,\u201d said Brendan Gace, head of private clients at Anchor Capital (Pty) Ltd. If spending on wages is curbed, there will be \u201can inevitable clash between government and the trade unions,\u201d he said.<\/p>\n

\n

Read: The rise and rise of public servants pay in South Africa<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

The credibility of South Africa\u2019s proposals to curb debt and save its sole investment-grade credit rating will be put to the test by powerful labor unions outraged by plans to pare back the wage bill.<\/p>\n","protected":false},"author":59,"featured_media":373852,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[26,8323],"class_list":["post-377523","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-government","tag-headline","tag-investec-asset-management"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/377523","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=377523"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/377523\/revisions"}],"predecessor-version":[{"id":377529,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/377523\/revisions\/377529"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/373852"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=377523"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=377523"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=377523"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}