'Empty' handed Treasury can't pay wage increases, but it can't 'walk away' that easy - court hears

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The Labour Appeals Court heard how Covid-19 has severely impacted government's ability to honour wage increases.
The Labour Appeals Court heard how Covid-19 has severely impacted government's ability to honour wage increases.
Nhlanhla Nkosi
  • Government can't afford pay increases this year to state employees, the Labour Appeal Court has heard.
  • Unions, however, want government to fulfill its obligation to a three-year wage agreement, even if it means establishing a retrospective payment arrangement.
  • Judges raised concerns that the Covid-19 pandemic may have impacted government's ability to afford increases.   

The Covid-19 pandemic has severely impacted government's fiscal position, making it impossible to pay increases for public sector workers this year, a court has heard.

The Labour Appeal Court on Wednesday heard the arguments of public sector unions who are seeking a court order to implement salary increases for the final year (2020) of a three-year wage agreement signed in 2018.

Government reneged on the agreement this year, as part of a plan to slash the state's wage bill by R160 billion over the next three years.

Judges Dennis Davis, Violet Phatshoane and Philip Coppin heard that the Covid-19 pandemic had added different expenditure pressures to government, which now has to focus on alleviating the plight of the vulnerable, and saving lives and livelihoods.

Treasury's lawyer, Advocate Jeremy Gauntlett, plainly put forward that Treasury's hands are "empty".

Advocate Chris Orr, representing the Public Servants Association, however said that Treasury - is bound by the agreement, as the minister of finance was part of the Cabinet meeting, which ultimately approved the proposal for it.

Judge Davis pointed out that circumstances have changed over the past three years, given the pandemic, which caused a near collapse of the economy.

In response, Orr cited Treasury in saying it could afford the wage increase, but it would require retrenchments. That is unlikely to happen and the parties may have to be forced back to the negotiating table. 

Advocate Ngwako Maenetje, who was representing three unions, argued that the decision by government not to honour the agreement is not purely because of Covid-19. The country had been downgraded to junk status prior to the pandemic, he added. He pleaded with the court not to allow government to "walk away" entirely from its obligations. Maenetje said a remedy would be for the court to order the parties to renegotiate an appropriate dispensation. 

Scott free

National Education, Health and Allied Workers' Union lawyer, Advocate William Mokhare, similarly argued that government should not be allowed to get off "scott free" and it must fulfill its obligations. This could involve making retrospective payment arrangements to workers.

Mokhare said that government had not played with "open cards" about its ability to afford increases by first trying to challenge the legality of the wage agreement. He said the fact that all relevant ministers were at the Cabinet meeting, including the president, meant there was "full compliance" when the decision to approve it when the offer was made.

When asked how the unprecedented circumstances brought on by the pandemic might impact the fulfilment of the agreement, Mokhare said, "the court should still encourage the state to respect its obligations".

He said that allowing government to walk away from the agreement because of Covid-19 could be likened to allowing people to walk away from their debt obligations.

"South Africa is a young democracy, still finding its way to full compliance, the state should be leading by example," said Mokhare.

Judgment is reserved. 

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