Treasury urging municipalities to apply for exemptions from wage deals, says Samwu
Economist says Treasury’s request is about affordability
SA’s largest municipal workers’ union, Samwu, says calls by the National Treasury to urge municipalities to apply for exemption from a multiyear wage agreement will weaken unions’ bargaining position and set a bad precedent.
The request comes as municipal workers are due for a wage increase of 6.25% on July 1. This forms part of the last leg of a three-year wage agreement signed at the SA Local Government Bargaining Council in 2018.
In February, finance minister Tito Mboweni announced plans to cut the public sector wage bill by more than R160bn over the next three years, a decision the unions said was tantamount to a “declaration of war”.
In June, public sector unions took the government to court over its refusal to implement a standing wage agreement, which would have seen public servants’ salaries increase in April.
On Thursday, the SA Municipal Workers Union (Samwu) said it was “shocked and disgusted by the Treasury’s attempts to collapse” collective bargaining in the local government sector.
The union said it had attended a meeting of the bargaining council on Wednesday, where a delegation from the Treasury “unashamedly repeated their call that municipalities should apply for exemption from the collective agreement”, said Samwu general secretary Koena Ramotlou.
The delegation used the Covid-19 pandemic as the “motivation” for municipalities to renege on the wage agreement, he said.
However, Karen Heese, an economist at Municipal IQ, a web-based data and intelligence service which monitors and assesses SA’s 257 municipalities, said the coronavirus outbreak had “profoundly” compromised local government, and that local government finances were already under strain before the pandemic began, with above-inflation cost drivers such as bulk electricity tariffs.
The request by the Treasury was not in bad faith. “Salaries represent a substantial portion of municipal budgets (roughly one-third) and many municipalities were already hard pressed to meet these obligations,” said Heese.
“In the past few months large municipalities like Ekurhuleni and Johannesburg have seen revenue shortfalls of over R1bn (each) as consumers who normally meet their financial obligations have lost their sources of income and are unable to pay for rates and services.”
Ramatlou criticised the Treasury for having adopted “a neoliberal stance which seeks [to] scale down on government expenditure while blaming workers for government’s inefficiencies”.
“What the team from National Treasury did not take into account is that municipalities are in the process of passing their own budgets in anticipation of the new financial year, with some having already approved salary increases for both councillors and municipal workers.”
He said the Treasury was effectively asking municipalities to reverse their own council resolutions. Ramotlou said Treasury was not party to the bargaining council. “We therefore send a strong warning to National Treasury to stay out of the affairs of municipalities and workers, they have long failed to do right by municipalities.”
“The union further sees the acts by [the] Treasury as a provocation of municipal workers and an attack on collective bargaining which they are not part and parcel of.”
The union expected all of the 257 municipalities to implement salary increases on July 1, failing which Samwu members would strike to force them to comply with the binding collective agreement.
Heese said there will likely be a “political storm” around the issue, “but one which resonates and mirrors the national public sector wage agreement”.
“It remains to be seen whether Salga has the political appetite to follow through with the proposal.” Salga is an employer body representing the country’s municipalities. Its spokesperson Sivuyile Mbambato could not immediately be reached for comment.
The Treasury’s request was about affordability, said Heese, adding that public sector wages have risen “substantially in recent years and that the current trajectory is fiscally unaffordable”.
The National Treasury promised to respond to a request for comment but had not done so at the time of publication.