Finance Minister Enoch Godongwana will be heading to the Public Sector Labour Summit later this month emboldened by a landmark Constitutional Court (ConCourt) ruling on Monday, which dismissed an appeal brought by public sector unions after the government reneged on implementing the last leg of its 2018 collective wage agreement.
FINANCE Minister Enoch Godongwana will be heading to the Public Sector Labour Summit later this month emboldened by a landmark Constitutional Court (ConCourt) ruling on Monday, which dismissed an appeal brought by public sector unions after the government reneged on implementing the last leg of its 2018 collective wage agreement.
This as Godongwana needs to arrest the escalating public sector wage bill.
The summit, from March 28 to 31, will present Godongwana and labour stakeholders with an important opportunity to engage in building a sustainable public service and remuneration guidelines for the government’s 1.3 million workers.
The ConCourt upheld an earlier Labour Court ruling that the Cabinet’s decision to funnel an additional R37.8 billion to public servants wages had violated clauses 78 and 79 of the 2016 Public Service Regulations.
The 2016 Regulations stipulated that any proposed wage increase must either be covered out of the existing budgets of government departments or be accompanied by an explicit undertaking from the National Treasury that it would fund the increase.
It is estimated that implementing the final year of the three-year wage agreement would have cost the fiscus R38bn.
Nonetheless, the government granted the increase despite failing to obtain the required approval from the Treasury, which explicitly rejected the Cabinet’s request to fund the additional billions.
The court thus said the government decision was “invalid, unlawful and unenforceable”.
The government’s expenditure on wages is expected to be be north of R650bn in 2021/22.
The Health & Other Services Personnel Trade Union of South Africa (Hospersa), a union with more than 50,000 members in the public service, said it was “extremely shocked” by the ConCourt judgment.
Hospersa legal department manager Sean McGladdery said the judgment meant that employers could renege on wage agreements as and when they please, undermining the process of wage negotiations.
“While we understand that the country is experiencing economic difficulty, it is the workers who are being made to bear the brunt and have now become economic scapegoats for poor planning and administration,” McGladdery said.
The SA Federation of Trade Unions (Saftu) said the ConCourt had arrogated itself the role of an economic analyst, considering the economic arguments brought by the state, which were the main reason the state argues it cannot fulfil that last leg of the collective agreement.
“By accepting that the state will be plunged into a “fiscal crisis” if it funds the wage increases for the public sector, it has accepted the neoliberal premise of the state’s self-imposed constraints on the fiscus,” Saftu spokesperson Trevero Shaku said.
“The ConCourt was, therefore, wrong, to wear an economical ideological outlook that is naturally on the side of capitalists and those neoliberals currently advising the government.”
Fitch Ratings agency recently commended the government for being relatively successful in containing wage growth during the pandemic as the Treasury said it would reduce the wage bill by more than R300bn in the next three years.
The government has already allocated additional funding of R20.5bn in the 2022/23 fiscus year to meet the cost implications of the 2021 public service wage agreement.
In his Budget Speech last week, Godongwana committed the government to controlling those parts of the Budget that were permanent in nature, including by arresting historically rapid increases in the public sector wage bill.
Godongwana said compensation spending would increase marginally at an average annual rate of 1.8 percent over the next three years, from R665.1bn in 2021/22 to R702bn in 2024/25.
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