Jee-A van der Linde, a senior economist at Oxford Economics Africa, told Business Report in an interview yesterday that “spending pressures remain high” for South Africa. File photo
THE Labour Court’s ruling compelling the South African government to augment the 2023 public sector wage increment with margins agreed during current wage negotiations places Finance Minister Enoch Godongwana in a dilemma in next week’s Budget as he strives to contain government spending and at the same time cushion public sector workers against rising inflation in an election year.
Jee-A van der Linde, a senior economist at Oxford Economics Africa, told Business Report in an interview yesterday that “spending pressures remain high” for South Africa.
“Given that the economy is weak, further fiscal slippage seems inevitable. Treasury is expected to announce R15 billion in tax measures during the upcoming Budget,” he said.
Although the 2023 wage agreement had already been “settled and included in the Budget”, according to Cosatu spokesperson, Matthew Parks, he said yesterday that engagements for this year’s wage increase “are still taking place at the Public Service Co-ordinating Bargaining Council (PSCBC) and are unlikely to be included” in next week’s Budget.
There was mounting pressure for the Treasury to acknowledge the difficulties that public sector workers are facing, hence there are expectations of a salary increase, said some union leaders yesterday.
This would compromise the Treasury’s proposed spending cuts tabled in the Mid-Term Budget Policy Statement (MTBPS), with Van der Linde saying any spending cuts would yield little impact for South Africa from a budgetary policy standpoint.
“Treasury’s proposed spending cuts during the MTBPS are negligible in the grander scheme of things, yielding little positive impact from a budgetary perspective, and they will arguably do more developmental harm down the line,” said Van der Linde.
“Budget cuts alone also do not address the issue of misspending. Treasury faces a difficult dilemma with the 2024 Budget ahead of this year’s elections.”
Moreover, the 2023 settlement agreement between the government and the health sector workers’ union compels the employer to commit “to augment the 2022/23 increment with a percentage to be agreed by parties in the current wage negotiation” processes.
In its 2024 Budget predictions, PwC sees Godongwana continuing to show “strong expenditure restraint” as far as possible. However, the largest “risks to expenditure include state-owned enterprises (SOEs) such as Eskom and Transnet in particular as well as the public sector wage bill” and demands for salary increases.
The Labour Court ruled at the weekend in favour of the National Education, Health and Allied Workers’ Union (Nehawu) declaring the settlement agreement concluded at the PSCBC in 2023 following the public service strike enforceable.
Nehawu embarked on the strike after wage talks with the government stalled, with the union demanding a 10% salary increase while the government was offering a 4.7% hike.
While both parties to the dispute subsequently settled on a 7.3% wage increase, Nehawu said the government had reneged on this, with departments in the public health sector disregarding the settlement agreement and implementing the “no work, no pay” principle selectively to certain members and shop stewards of the union in respect of their remuneration for February/March 2023.
Lwazi Nkolonzi, a spokesperson for Nehawu, said yesterday: “This Labour Court order is a victory for public servants who had embarked on a public service strike in defence of their rights and collective bargaining as a result of government unilaterally implementing an increment that was rejected at the PSCBC. We are expecting government to implement the court order and implement the settlement agreement, which includes, among others, the augmentation.” .
Nehawu said the Labour Court’s order protected workers “from employers who abuse their powers by undermining collective bargaining processes” by walking away from binding signed agreements. The order also protected the PSCBC as a platform for social dialogue.
“We call on the government not to commit the grave mistake that they committed (when) reneging on Resolution 1 of 2018. Failure to comply with the agreement will see the union proceeding with contempt of court processes,” Nehawu said in a statement.
BUSINESS REPORT