Budget 2021

Gordhan: Labour, government must compromise on public sector standoff

Minister of Public Enterprises Pravin Gordhan. (Yunus Mohamed/Photo24)
Minister of Public Enterprises Pravin Gordhan. (Yunus Mohamed/Photo24)

Public Enterprises Minister Pravin Gordhan has said government and labour will have to work diligently to seek a compromise if they are to realise government's proposal to reduce the public service wage bill by R160.2 billion in a sustainable manner.

The goal is to achieve the reduction in the next three financial years.

Gordhan was speaking at the News24 Frontline panel discussion on Thursday morning, the day after Finance Minister Tito Mboweni tabled his 2020 Budget Speech in Parliament on Wednesday morning.

During the Budget speech, Treasury proposed cuts to the public service wage bill of R37.8 billion in 2020/21, R54. Billion in 2021/22, and R67.5 billion in 2022/23.

Before the Budget, the Congress of South African Trade Unions – which is the ruling ANC's alliance partner – warned that it would regard such a move as a "declaration of war".

During the panel discussion, Gordhan, who previously served as finance minister, said the Budget reflected economic and fiscal realities, and that SA's fiscus has braved hard times before. Compromise would be necessary, he added.

"These are government positions that the minister reflects. If business labour and government agree that we need to work to get more investment, we can grow the economy. If we can make sacrifices to that end, now is the time to do that," Gordhan said.

More optimistic

Cosatu parliamentary liaison officer Matthew Parks said the federation would engage in good faith with government, but that it believed Luthuli House had not been engaging meaningfully with labour on the public service wage proposals.

"As Cosatu we want to save the state. Our members depend on it not just for salaries and pensions, but the public relies on it for service. We have been having good talks around talks about wages with government, but issues might not have been with dealt fast enough," said Parks.

Parks said, while government should also consider recovery and saving measures such as lifestyle audits or a 10% cut in executive compensation, Cosatu was more optimistic about discussing public wages now that it had been before.

Also speaking at the panel, Investec Asset Management head of investments Nazmeera Moola said it was encouraging that government was not looking at cutting wages, but rather at growing them more slowly than they had been growing before.

"If SA were a company, it would have had wage freezes a year ago. From a business perspective, wage freezes are a no-brainer. I would not want to have job cuts, but that would mean that wages will simply have to grow slower," said Moola.

* The Frontline panel discussion was organised by News24 which, along with Fin24 falls under Media24. Media24 is a news unit under Naspers.

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