Cosatu has criticised the decision by National Treasury to implement austerity measures. Picture: Timothy Bernard/African News Agency (ANA)
The Congress of South African Trade Unions (Cosatu) rejects National Treasury’s reckless attempts to impose misguided austerity budget cuts across government in the run up to the Medium-Term Budget Policy Statement (MTBPS).
The federation is deeply dismayed that Treasury has written to all State institutions instructing them to slash budgets by up to 15%, freeze all vacancies and infrastructure rollout programmes.
Whilst we appreciate the very real fiscal constraints facing the State and the need to cut fat and re-prioritise expenditure, the solutions offered by Treasury of slashing expenditure and further de-capacitating the State when the economy is in desperate need of stimulus and a well-oiled and capacitated public services, will only serve to choke the economy and further weaken an already enfeebled government and undermine its ability to provide the quality public and municipal services that the working class and the economy depend upon.
What is needed now is to grow the economy. That is the only sober and sustainable path to pay down our worrying debt trajectory. Pickpocketing nurses and underpaying police officers is not a solution.
Cutting the public service wage bill is exactly what Treasury has being doing since 2020, when the then Minister for Finance Tito Mboweni imposed a unilateral wage freeze and since then adjusted the wage bill at below inflation rates.
The narrow fixation of Treasury on cutting the wage bill is a lazy option and one that will not resolve the multiplicity of crises the country is facing. Underpaying a nurse will not get the trains to run on time. What it will do is to fuel the brain drain of skilled public servants, in particular, doctors, nurses, teachers, engineers, police officers, amongst others, to pack their bags and move to better paying and less stressful jobs overseas.
The crisis we are facing is not an expenditure crisis. The wage bill has been stable at 35% of the budget for more than a decade. The crisis is a collapse in company tax. This is because of the rapid deterioration in the capacity of Transnet to transport mining, manufacturing and agricultural exports and products to their markets timeously. Mining, in particular, is a major contributor to the state of company taxes and an earner of foreign investment and exchange for the economy. If government does not turn things around at Transnet fast, we will face a jobs bloodbath in the mining industry and a crisis of revenue that no amount of pickpocketing public servants will fix.
If we are to grow the economy, and reduce unemployment, and thus increase the revenue, the state needs to reduce debt. Then, government needs to deal with the real obstacles suffocating the economy, workers and businesses, namely to:
Provide additional support to Eskom to reduce and end load shedding and ensure reliable and affordable electricity.
Urgently intervene at Transnet and Metrorail to secure and rebuild our freight and passenger railway network and modernise our ports.
Stabilise and overhaul dysfunctional municipalities and restore basic services communities and businesses depend upon.
Allocate additional resources to the South African Revenue Service to tackle tax evasion and customs fraud and conduct lifestyle audits on the wealthy, and thus generate badly needed state revenue.
Fill critical front-line service vacancies in the public service, especially the police, National Prosecuting Authority and courts, enabling them to crack down on crime and corruption.
Give relief to commuters and the economy by reducing the taxes currently consuming 28% of the fuel price and place the chaotic Road Accident Fund under administration to lessen its need for fuel levy hikes.
Expand the Presidential Employment Programme to accommodate one million active participants by October’s MTBPS and two million by February’s budget speech to help young people earn a salary, gain invaluable experience and enter the labour market.
Enhance the invaluable Social Relief of Distress Grant to recover value lost to inflationary erosion by raising it to the Food Poverty Line and link it recipients to skills and job opportunities.
Expedite and not freeze the badly needed infrastructure investment programme.
If government can show the necessary fortitude and vision and implement these common-sense interventions, the economy can grow and soon meet the 4% growth target. This will set the nation on the path to a prosperous job creating economy, a capacitated developmental state and ensure the fiscus is set back on a secure path.
Cutting medication to a patient in the ICU ward at hospital will achieve little besides killing that patient. Workers can no longer afford to live on hope and prayers, whilst Treasury experiments with economic theories that have been rejected across the world, including in the industrialised west.
Cosatu is engaging the leadership of government and the Alliance to seek a more pragmatic and sustainable path to rebuilding the economy.
*Phetoe is General Secretary of Cosatu
**The views expresed do not necessarily reflect the views of Independent Media or IOL