SA government’s showdown with unions just got ugly – and worst is still to come

By Mike Cohen

(Bloomberg) – A showdown between South Africa’s government and its workers whose salaries are straining the national budget just got ugly – and looks set to get a whole lot worse.

The National Union of Metalworkers of South Africa and the South African Cabin Crew Association, which represent more than 3,000 staff at South African Airways, have said they’ll go on strike on Friday to protest the carrier’s failure to meet their pay demands and plans to fire 944 employees. They want job security for at least three years, 8% salary increases and a halt to the hiring of outside contractors to provide services such as security and cleaning.

SAA canceled almost all its flights scheduled for November 15 and 16 “to minimise the impact of disruptions” that might result from the strike, it said in a statement on Wednesday. The airline, which had offered to raise wages by 5.9%, will make a revised offer at a meeting on Thursday in a bid to avert the strike, its spokesman Tlali Tlali told Johannesburg-based broadcaster eNCA.

The airline, which has lost more than R28 billion ($1.9bn) over the past 13 years and relies on government bailouts to remain solvent, says it has no option other than to restructure or place the entire business at risk. The unions counter that their members shouldn’t have to pay the price of years of mismanagement and misappropriation of the airline’s funds, and that alternate remedies need to be sought.

The upheaval at SAA is likely to be a precursor to labour action at other state companies that are trying to trim their bloated wage bills.

Eskom, the loss-making utility that supplies about 95% of the nation’s power, says it has about 16,000 staff more than it needs. Unions have pledged to bring the entire country to a halt should widespread job cuts be instituted.

Labour groups representing workers employed directly by the state have similarly warned of “war” should the government seek to unfairly limit salary increases or try to roll back an inflation-busting three-year pay deal that expires in 2022.

Debt trap

Finance Minister Tito Mboweni has cautioned that state coffers are almost bare and with the economy barely growing, the government risks falling into a debt trap unless spending is cut.

Treasury data shows that compensation for state employees accounts for 35% of national expenditure and that the average remuneration in the public service rose 66% over the past decade after accounting for inflation. National and provincial government employees on average earn about R393,000 a year, or 44% more than those who work non-agricultural sector jobs in the private sector do, it said.

Even so, President Cyril Ramaphosa will have a hard time facing down the unionists, who supported his rise to power and are among his staunchest backers within the deeply divided ruling party.