South Africa

ANALYSIS

Government might have to cut civil servants wages — the reaction will not be pretty

When civil servants are not paid there are strikes, a refusal to work and detrimental effects on social services. Whichever way we look, it appears such horrid time is coming again soon, says the writer. (Photo: AdobeStock)

There have been suggestions that civil servants should take a 10% wage cut as part of plans to bail out the economy. The unions are unlikely to accept this and it may be tantamount to declaring war.

As the government of President Cyril Ramaphosa attempts to take charge of the state and the political environment, it is obvious that one of the biggest conflicts is going to be about the state’s wage bill.

Time and time again there have been warnings that the government spends too much on salaries, and not enough on investment or infrastructure or classrooms.

It appears there has been some circling around each other, as government and unions examine each other’s strengths and weaknesses. Now there is evidence that government is thinking out of the box, and one official has suggested state workers could take a 10% wage cut to ease the pressure. It appears a battle might be looming.

Anyone who tried to go into Tshwane on Monday 29 July will know that there are few, if any, limits to what unions will do when they are angry. Buses were driven from their depot – where they had been locked up – by members of the SA Municipal Workers Union and used to blockade roads. When asked to justify what seemed to be the theft of city property, the union’s Tshwane regional secretary, Mpho Tladinyane, said buses were the workers’ tools of the trade, and it was normal for them to take buses, even if they were city property.

Over the past few months, there has been a discussion about the possibility of retrenchments in the public service. The Minister of Public Service and Administration, Senzo Mchunu, said retrenchments are not currently in the pipeline. He will know how important unions are to the ANC, and the power they have over the state. Just last year, protest action led by the National Union of Metalworkers of SA ended up with load shedding (the union has denied Eskom’s claims of sabotage).

Mchunu insisted that the government will continue with its programme of offering workers early retirement, in other words giving them a package to go. Some of the unions have told their members not to take the packages, saying the civil service cannot do without them, and it is their duty to remain.

Then, on Sunday 28 July, City Press published a story in which it quoted the National Treasury director-general, Dondo Mogajane, as suggesting that government workers could take a 10% wage cut. He says the government simply doesn’t have the money to continue as it is. Pointing to the recent bailouts of Eskom and other SOEs, he said the money would have to come from somewhere. And if people are serious about not allowing any retrenchments, this would allow the government to keep everyone in the civil service employed, while also fixing its fiscal problems.

It should not be forgotten that Mogajane’s boss, Finance Minister Tito Mboweni, has come close to making similar suggestions. Just last week, while announcing the latest round of bailouts (including for the SABC, this writer’s other employer), he said this cannot go on.

It might be an understatement of the year, but let’s say it anyway: the unions are unlikely to accept this. A salary cut would be tantamount to declaring war.

Perhaps Mogajane was simply thinking aloud or creating a negotiating position for whatever is to come.

The government is in a tight squeeze. The bills run up over the past 10 years must now be paid. Much of this has to do with corruption, and the use of patronage to fill positions. At the same time, the all-important rating agencies want to see SA government as capable of balancing its books, or at least to show a plan to balance its books in the medium term. In October, Moody’s is due to give its verdict on whether we will remain investment grade. That could well serve as a tipping point.

One of the problems about this argument is that it is often presented as a “unions protect jobs” discussion, in which it appears unions will not allow people to be retrenched. Considering the financial problems of government, and the repeated warnings from various finance ministers, this is not surprising. The unions themselves may have allowed their organisations to be painted into this position, because of what they have said in public.

But, there is a bigger discussion, which is about what the size of the civil service should be, and what it has been historically.

Neil Coleman, the co-director of the Institute for Economic Justice, recently tweeted several images that show how the current size of our civil service compares with that of the past.

One of those images shows how much money the government is spending on salaries compared with its total expenditure. As can be seen, it is actually lower than it was in the mid-1990s:

Another image shows how there is still a high percentage of unfilled vacancies in government:

This data could provide much ammunition for the unions. They will say it would be ludicrous for the government to cut jobs now and that to provide services, more workers are needed.

The next question then, is: what will give?

Government has no money, it’s under pressure from rating agencies and there is no room left for manoeuvres.

Unions have members who cannot afford to be unemployed. They too will have no room in which to move.

That only leaves space for fiddling at the edges.

Perhaps the government could propose that those who are in the government sector and who earn above a certain amount a year could take a pay cut. Say that amount was R1-million. That may be doable, but the government would be taking on the elites within itself. These are people with significant resources, who would not be afraid to use their political power to defend their positions.

It is likely this situation will drag on for a long time. The only factor that could affect a significant change is if the government runs out of money. Already Denel has had to pay a portion of salaries late. Several municipalities have had to ask their province for money to pay salaries.

When civil servants are not paid, there is often a big social impact. There are strikes, a refusal to work and detrimental effects on social services. The ordinary people of South Africa, who are supposed to receive those services, suffer the most. The country is often plunged into days and weeks of pain. Whichever way we look, it appears such horrid time is coming again soon. And that we can pretty much do nothing to prevent it. DM

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