No pay for workers for 4 months, says bankrupt Eastern Cape municipality

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The Amathole District Municipality says it will not be able to pay its monthly salary bill of R65 million for four months. (Supplied)
The Amathole District Municipality says it will not be able to pay its monthly salary bill of R65 million for four months. (Supplied)
  • More than 1 600 Amathole District Municipality workers won't receive salaries for four months.
  • Municipal management said workers would not be paid for February, April, May and June.
  • The South African Municipal Workers' Union has rejected the salary freeze and is calling for the municipal manager to be fired.

The cash-strapped Amathole District Municipality in the Eastern Cape says it will not pay salaries to its 1 670 employees for four months due to "strained financial resources".

This was contained in a circular, which municipal manager Thandekile Mnyimba drafted, to all employees, councillors and traditional leaders on the municipality's payroll.

Mnyimba said workers would not be paid for February, April, May and June and advised them to consult their creditors.

Equitable share

Amathole District Municipality spokesperson Nonceba Madikizela-Vuso confirmed that the municipality could not afford to foot the monthly salary bill of R65 million.

According to Madikizela-Vuso, workers will receive their March salaries when the municipality receives its equitable share from National Treasury. However, the money will not be enough to cover other months.

Mnyimba said one of the reasons for the financial crisis was low revenue collection. The municipality only collected 25% revenue in the first two quarters of the 2020/21 financial year.

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Madikizela-Vuso also revealed that the municipality was deep in debt and owed suppliers R322m.  

The South African Municipal Workers's Union (Samwu) is rejecting the salary freeze and is calling for Mnyimba to be sacked and for the municipality to be put under administration.

Among the reasons for the high salary bill was the fact that the municipality was "unlawfully" categorised as a Grade 7 authority, instead of a Grade 6 one, with salaries of workers of the district authority wrongfully on par with those working for a metro.

"The municipality has constantly highlighted that the root causes of the municipality being technically bankrupt, amongst other things is the high salary bill as a result of benefits and the unlawful recategorisation of the municipality from Category 6 to Category 7 and standardisation," said Madikizela-Vuso.

Staff retrenchements

Madikizela-Vuso said the municipality requested money from the Eastern Cape provincial government to pay the four months of salaries.

The municipality is also considering instituting voluntary retrenchments, targeting 33% of its staff complement.

"Further to the request is an amount of R150 million targeted at what the municipality terms a 'mutual separation package' wherein employees will be afforded an opportunity to apply to part ways with the municipality. This is targeting 33% of employees at middle management [level], where the cost of employment is too high," said Madikizela-Vuso.

The municipality's plan to review employee benefits policies in an effort to curb expenses, was interdicted by the Labour Court, said Madikizela-Vuso.

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The municipality, which has offices in East London, has been under siege with labour action from its workers.

One of the most notable strikes was a costly six-week protest over a wage dispute which cost the district authority R19m after protesters vandalised infrastructure.

For the past two years, the municipality has been relying on bank overdrafts to pay salaries, Mnyimba said, adding that it was a costly exercise which was unsustainable in a long run.

Mnyimba has also listed drought-mitigating measures as an expense that contributed the municipality's financial crisis.

Samwu provincial secretary Lona Ludidi said maladministration, financial mismanagement, outsourcing and the privatisation of work at the municipality, as well as fruitless and wasteful expenditure, had caused the financial crisis.

Cited as an example of fruitless expenditure, was an incident in which ADM organised an end-of-year function in December 2019 for councillors. The bill for alcohol and food amounted to R60 000.

"Also, for consecutive years, the Auditor-General report always noted millions of rands that are unaccounted for," Ludidi added.

Ludidi slammed Mnyimba for allegedly not informing unions first about his plans to freeze salaries.

"Our boss was supposed to call us to a labour forum platform and table his plans and take us into confidence of the situation in order for us to make an input and engage them. We are not surprised about this move because our boss has always been this hostile towards unions and refusing to recognise us. We expected this treatment from him."

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