Ramaphosa ‘must confront wage monster’

Cyril Ramaphosa
Cyril Ramaphosa
Image: Moeletsi Mabe

In the public sector wage bill‚ President Cyril Ramaphosa has inherited a monster that has grown out of all control.

His ability to tackle it will reveal his political clout within a party that does not want to harm its support base.

This was said by Institute of Race Relations head of politics and governance‚ Gareth van Onselen‚ in a report titled “The public sector wage bill: Slaying the dragon”.

Government and unions are currently before the Public Service Coordinating Bargaining Council‚ trying to negotiate a new wage agreement for civil servants.

Van Onselen said: “The negotiations are a litmus test for Cyril Ramaphosa’s administration. The problem government faces is this: the public sector wage bill is spiralling out of control.

“As the size of the public service has expanded year in and year out since 1994‚ so the wage bill has grown‚ above inflation almost every year‚ over the same period.”

The report warns that the public sector wage bill now constitutes a dangerously disproportionate percentage of South Africa’s balance sheet.

“Unless someone is willing to take a hard line‚ and soon‚ it is set to become the defining obstacle to economic growth.”

Warning shots were fired yesterday by public sector unions under the Cosatu umbrella at the Public Sector Coordinating Bargaining Council – namely Denosa‚ Nehawu‚ Pawusa‚ Popcru‚ Sadtu and Sama.

In January‚ workers demanded that salaries be increased by CPI plus 3% for the lowest levels‚ with a 2% adjustment for levels eight to 10 and 1% for levels 11 and 12.

In a statement‚ the unions said they “are fed up with the endless delaying tactics played by the employer at the wage negotiations that are currently under way”.

Cosatu said the negotiations should have been concluded before the new financial year kicked in on April 1 but another round of talks was scheduled for this week due to delays.

Yesterday was D-day for programming and loading of payment for employees due to be paid on April 15 and those who get paid at month-end in the government‚ Mugwena Maluleke‚ the convener of the Cosatu unions at the negotiations, said.

“We are warning the employer‚ under the leadership of the minister‚ [that if] the meeting tomorrow [today] passes without any agreement‚ we will be left with no other option but to go back to our members immediately for consultation for a possible shutdown of the public service.”

A reduction in the number of staff at state-owned companies would also be rejected by Cosatu.

The federation said in a separate statement yesterday that it was alarmed at lobbying by the Organisation Undoing Tax Abuse (Outa) for staff cuts at Eskom.

“We are not going to entertain any talk of retrenchments at Eskom‚” the labour federation said.

“Workers should not be forced to pay with their livelihoods for the failures of government.

“We have seen no tangible steps to address the poor leadership and financial mismanagement at Eskom and the rush to cut jobs and destroy the livelihoods of many innocent workers and their families is an ill-conceived idea.”

In the February budget‚ the IRR said then finance minister Malusi Gigaba had noted that public sector wages had increased 10.3% annually since 2009‚ significantly higher than the rate of inflation.

The IRR report said the government spent around R587-billion on its wage bill (32.5% of total spending)‚ and Gigaba warned‚ “some national departments are at risk of breaching their compensation ceilings”.

Years of above-inflation increases had seen the total bill escalate to the point of crisis‚ Van Onselen said.

“And while Jacob Zuma‚ who was prepared to wipe out government’s R5-billion contingency reserves to fund the last negotiated outcome‚ knew which side his bread was buttered on‚ Ramaphosa now has a political paradox‚ the solution to which no one is going to like very much.”

Van Onselen said not even the DA had an effective plan to tackle the problem of high costs versus votes.

According to the Treasury‚ the number of full-time employees in national and provincial departments stands at 1.3 million.

While there has been some growth in the last decade at national level (up from 348 422 in 2006 to 416 396 in 2016), the bulk has come at provincial level.

Adding those people employed at local government level brings the grand total to more than two million.

Remuneration had grown at a greater rate than GDP. “Thus‚ while the country is generating less capital‚ more is being spent on the public sector wage bill.”

The IRR said that not only was the government the central employer but‚ for most people‚ it was paying higher wages than the private sector.