South Africa can\u2019t implement a pay deal with public servants because it would precipitate a fiscal crisis, Finance Minister Tito Mboweni said.<\/p>\n
The government and labour unions will square off in the Labour Appeal Court on Dec. 2 over Mboweni\u2019s proposal to freeze wages that have surged 51% since 2008.<\/p>\n
Last week, Fitch Ratings and Moody\u2019s Investors Service cut South Africa\u2019s debt assessments deeper into junk, saying the state may struggle to stick to its plan to rein in spending.<\/p>\n
\u201cWhat government and the South African economy cannot now afford, and what is not just and equitable under the current circumstances, is for civil servants to claim yet further inflation-beating and private sector outperforming salary increases off an already high base,\u201d Mboweni said in court documents.<\/p>\n
South Africa\u2019s government reneged on a three-year pay deal earlier this year and Mboweni said last month it will freeze wages for the coming three years.<\/p>\n
The government and unions usually negotiate page for three years at a time and the current agreement will end in March 2021.<\/p>\n
The Congress of South African Trade Unions, the nation\u2019s largest worker federation, has warned the dispute over salaries could lead to the unravelling of its alliance with the ruling African National Congress.<\/p>\n
Mboweni said Zambia\u2019s financial woes provided a cautionary tale and South Africa can ill afford to go down the same path.<\/p>\n
Zambia this month\u00a0defaulted\u00a0on its Eurobonds, the first African nation to do so since the onset of the coronavirus pandemic.<\/p>\n
The South African government would be compelled to borrow more than R78 billion ($5.1 billion) if the court backs the labour unions in their fight to have the wage agreement implemented, Public Service and Administration Minister Senzo Mchunu said in the court documents.<\/p>\n