Treasury sees debt surge if wage deal proceeds

0:00
play article
Subscribers can listen to this article
National Treasury director general Dondo Mogajane.
National Treasury director general Dondo Mogajane.
Ziyaad Douglas, Gallo Images
  • Unions want government to honour its wage agreement.
  • The public-service wage deal could lump the country with R37.8 billion in additional debt.
  • Finance Minister Tito Mboweni is scheduled to present his medium term budget policy statement later this month.


South Africa is opposing a bid by labour unions to compel the state to honour a public-service wage deal, warning the accord would lump the country with R37.8 billion of additional debt.

The government in April reneged on an agreement to raise pay for more than 1.2 million employees as part of an effort to stabilise state finances. The Public Servants Association, which represents about 250 000 government workers, took the dispute to the Public Service Co-ordinating Bargaining Council and the matter is now before the Labour Court.

PSA spokesman Reuben Maleka and South African Democratic Teachers Union Secretary-General Mugwena Maluleke said their organisations are opposing the government. The Congress of South African Trade Unions, the nation's biggest federation of labour groups, on Friday called for protests next week to back their demands for the government to honor its wage agreement.

Freezing the pay of civil servants is critical to Finance Minister Tito Mboweni's plans to cut government spending by R230 billion over the next two years to rein in surging debt. About a third of the government’s annual R1.95 trillion budget is spent on salaries.

Mboweni is scheduled to present his medium-term budget later this month.

'Increase unaffordable'

Increasing government employees' wages is unaffordable, particularly given the impact of the coronavirus pandemic on state finances, Treasury Director-General Dondo Mogajane said in a July 17 affidavit.

"Government is compelled by the Covid-19 pandemic to spend public funds (which are already in deficit) to alleviate the plight of the poor and vulnerable," he said. "Regrettably government simply cannot in these circumstances accede to the applicant's claim for yet further increases."

Public Service and Administration Minister Senzo Mchunu backed the Treasury in a September 25 affidavit.

Mboweni in June presented an emergency budget in which he targeted a primary surplus by 2023/24. This month's announcement is expected to outline spending cuts and revenue-adjustment measures amounting to about R250 billion over the next two years.

Mogajane stressed that while the government is unable to afford raising public servants' pay, employees aren't facing pay cuts as some in the private sector have.

"The Covid-19 pandemic has come at a great cost to employment in the private sector, with numerous remaining employees receiving no increments or even experiencing pay cuts to preserve employment," he said. "The applicants' members' jobs are in contrast not threatened. Nor are their salaries reduced."

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
USD/ZAR
14.06
-1.0%
GBP/ZAR
19.68
-0.3%
EUR/ZAR
17.09
-0.4%
AUD/ZAR
11.04
-0.2%
JPY/ZAR
0.13
-0.5%
Gold
1,835.08
+1.1%
Silver
27.39
+0.3%
Palladium
2,928.28
-0.8%
Platinum
1,253.00
-0.2%
Brent Crude
68.09
-1.3%
Top 40
62,573
+1.4%
All Share
68,520
+1.4%
Resource 10
71,474
+2.1%
Industrial 25
86,856
+0.9%
Financial 15
12,711
+1.1%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
Yes, and I've gotten it.
21% - 1387 votes
No, I did not.
52% - 3453 votes
My landlord refused
27% - 1832 votes
Vote