Mboweni’s job just got tougher as unions snub state’s bid to renegotiate pay

By Antony Sguazzin

(Bloomberg) – South African labour unions have rejected a government proposal to review planned increases for civil servants days before they were due to be implemented.

The Public Servants Association, which represents 230,000 government workers, said the state on Tuesday asked to review the last leg of a three-year pay agreement because it couldn’t afford it. Finance Minister Tito Mboweni is due to announce the annual budget on Wednesday.

“The timing of the proposal, a few days before the adjustments were due to be implemented, speaks of a government that regards public servants as an easy target to resolve its financial woes,” the PSA said.

Pushing the proposals through in the budget speech will be seen “as a declaration of war,” the Central Executive Committee of the Congress of South African Trade Unions, the country’s biggest labour federation, said in an emailed statement. Earlier this month, Cosatu said the government is seeking to cut 30,000 civil-servant jobs as Mboweni seeks to rein in government debt and get economic growth going.

“The CEC views this action by the government as a direct attack on collective bargaining, which will never be accepted,” Cosatu said. “This irresponsible and blatant act of provocation will seriously destabilise the public service and we warn the government to abandon this idea and give workers what is due to them.”

What Bloomberg’s economist says:

“Public wages are set through bargaining with unions and agreements stay in force for three years. The current agreement is in place until March 2021, making it unlikely that the Treasury can report much progress on its efforts to address the wage bill before negotiations are finalised by the end of the year.”

— Boingotlo Gasealahwe, Africa economist

Freezing wages in the public sector could save as much as R128bn ($8.4bn) over the next three years, Barclays  economist Michael Kafe said in note dated February 24. Barclay’s base case scenario is that Treasury will only be able to save R7bn over the period because the government lacks the political will to cut payroll costs before the ruling party’s national general conference in June.

The wage bill accounts for more than 35% of government spending.

Union, Telkom in court tussle over job cuts

Meanwhile, in other jobs news the Communication Workers’ Union is trying to prevent Telkom from continuing with a plan to cut as much as 20% of its workforce to cope with falling sales in its landline business and a weak South African economy.

Telkom is rushing the process and hasn’t considered other alternatives to job cuts that could affect as many as 3,000 employees, the CWU said.

The former monopoly started the consultation process with labour unions in January after a declining performance in its fixed-voice business, which previously made up more than half of gross revenue. Its fixed-data unit is also suffering because of a migration to mobile data, the Pretoria-based company said, adding that it is trying to achieve “organisational and operational efficiencies”.

South Africa’s economy is stuck in its longest downward spiral since 1945 as President Cyril Ramaphosa struggles to push through reforms needed to spur growth. Power cuts, delays in policy implementation, deteriorating public finances and the threat of South Africa losing its sole-remaining investment-grade credit rating dragged business confidence down to the lowest level in 34 years in 2019. – (Loni Prinsloo, Bloomberg)

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