National Treasury director general Dondo Mogajane.
Ziyaad Douglas, Gallo Images
- The government will have to spend an addition R37.8 billion this year if it were to fulfill a 2018 agreement to give civil servants above-inflation increases.
- National Treasury has told the courts the government cannot simply afford it and it would be a debt for future generations to pay.
- Further, Treasury says it is not just and equitable to give civil servants increases when the majority in the private sector are facing salary cuts and job losses.
The staggering cost of the public sector wage bill has long been a bone of contention, with the ANC government erring towards satisfying the demands of organised labour.
But as the government had been warned for years, it has finally realised giving public servants above-inflation increases every year – especially during an economic crises brought by the Covid-19 pandemic – is not only unsustainable, it is also immoral.
Enter National Treasury director-general Dondo Mogajane, who could not have painted a clearer picture of how dismal South Africa’s fiscal prospects are.
He was candid about the bizarre demand by public sector unions that the government maintain an agreement signed in 2018 that gave civil servants a 4% increase was simply unaffordable and even unethical.
OPINION | SA is banking on SMMEs for inclusive economic growth – but they’re broke
The Public Service Association (PSA) has gone to court to get it to compel the government to keep up its end of the agreement – one that would cost the fiscus an additional R37.8 billion in 2020.
Public sector union Nehawu is also fighting for the government to keep its side of the bargain, but has opted to go through arbitration which is set to take place next week.
In an affidavit filed this week with the High Court, Mogajane put forward a compelling argument of how unthinkable it would be to give salary increases to already well-paid civil servants at a time when South Africans were losing their incomes en masse.
READ | No surprises as Reserve Bank cuts repo rate by 25 basis points
Most importantly is if the government has to give in, it will add to the country’s current debt load of R3.97 trillion – something it just cannot simple afford.
“Granting it would also result in inequitable intergenarational allocation of government debt, requiring future generations to service the debt incurred in respect of current civil servants’ salaries,” Mogajane told the court.
In essence, the government will have to further choke future generations in debt just to make civil servants happy.
Just and equitable
Mogajane could not scream any louder that civil servants were already well paid with little risk to their jobs despite the economic crises.
Not getting a 4% increase when most of the public sector were getting salary cuts should be an understandable ask, he argued.
“Since public servants have been the beneficiaries of decades of above-inflation salary increases, outperforming private sector salaries, this is not just and equitable,” Mogajane told the court.
Worst still, as people were losing their incomes in droves, Mogajane said, the government was now compelled to expend additional funds to protect vulnerable people, some rendered destitute by job losses or salary cuts in the private sector.
OPINION | Investment in infrastructure should be incentivised, not prescribed
But the public sector unions have dug in, insisting it cannot be held responsible for the government’s inability to manage its funds.
That argument may have held water in a pre-Covid-19 era because, as Mogajane argued, none of the consequences had been foreseen or was reasonably foreseeable when 2019 ended.
He took it a step further, saying even the adverse fiscal developments pre-dating Covid-19, like downgrades and the budget shortfall, could be foreseen.
ALSO READ | Municipalities won the budget battle, but could still lose the Covid war
Mogajane pointed out the only reason the government agreed to the three salary increases was because of the agreement that the public wage bill would be reduced by early voluntary retirements.
Not only has that not happened, the process to have people close to retirement leave the public service has been frustrated.
Principle
The public sector has made a legitimate argument the government pulling out of a three-year agreement undermines the principle of collective bargaining.
But in a pandemic during an unparalleled global economic crises, the government said it did not have the luxury of sticking to an agreement because of principle.
OPINION | Fighting Covid-19 also requires intensifying anti-corruption efforts
The cost has a human impact.
In the case of teachers, the government cannot hire more or procure more textbooks because of the salary bill.
“This over-rapid increase in compensation spending is at the expense of necessary non-compensation spending [e.g. textbooks, teaching material, school nutrition and transport and their equivalents in respect of other fundamental rights]. It is also at the expense of the headcount,” Mogajane said.
But to this, the unions have a firm response, arguing the government was already plundering its coffers through corruption and, therefore, if it could still have funds looted during a pandemic, civil servants could get their due increases.
The PSA is expected to file its response to Treasury on Friday in the High Court.
