Extraordinary times require extraordinary measures on public sector pay
Government employees’ demand for above-inflation salary increases is arguably immoral
The SA government remains the largest single employer in the labour market, accounting for 2,108,125 public servants at last count.
Public servants are individuals who work for the state and whose main duty is associated with the welfare of the public and society at large. Their duties include providing service to the public by means of protection, administration or maintenance, in the form of doctors, nurses, teachers, police, correctional services officers and employees in all three branches of government.
Despite the unprecedented Covid-19 pandemic, the public sector had hoped finance minister Tito Mboweni would honour the 2018 agreement to give public servants above-inflation salary increases of 4.3%-5.4% in 2020. If the wage demands are honoured, the government will have to find and spend an additional R37.8bn this financial year.
According to SA Revenue Service (Sars) commissioner Edward Kieswetter, the country should expect to see a revenue shortfall of about R285bn this financial year, which is 15%-20% shy of what Sars had expected to collect for the financial year. In the three months leading up to June, revenue was down R78bn (-24%). In June alone revenue was down R39bn, a 26% decline from the same period the year before.
Under normal circumstances salaries are a sensitive topic; in these Covid-19 times they become even more so. The pandemic has forced the government to exercise fiscal austerity and reduce its expanding expenditure in an attempt to curb the effects of the pandemic and SA’s economic decline.
Unfortunately, the ANC government has demonstrated a propensity to placate the labour unions for their support during election time. The reality is that giving public servants an above-inflation increase — especially during this Covid-19 pandemic-induced economic crisis — is not only unsustainable but may be immoral too.
National Treasury director-general Dondo Mogajane has tried to buck the trend of giving into the demands of the labour unions: “Since public servants have been the beneficiaries of decades of above-inflation salary increases, outperforming private sector salaries, this (paying further increases) is not just and equitable. Least of all in circumstances where government is now compelled by the Covid-19 circumstances to expend additional funds to protect vulnerable people ... This is not in solidarity with other workers in the rest of the country.”
According to the National Income Dynamics Study Coronavirus Rapid Mobile Survey, which assesses the impact of the Covid-19 pandemic on employment and welfare for a representative sample of 7,000 South Africans (surveyed between May 7 and June 27), about 3-million people in SA lost their jobs between February and April as a result of the Covid-19 pandemic. Women accounted for 2-million of those jobs.
In 2018 the government as an employer signed a three-year wage agreement with labour unions, bringing an end to the lengthy wage negotiation process. In terms of the agreement state employees, depending on their salary level, would receive varying increases above the change in consumer price inflation for the agreed period. This was despite then public service & administration minister Ayanda Dlodlo acknowledging that the wage negotiations took place amid growing concerns over the escalating public service wage bill and a contracting economy, which posed serious challenges to the already strained fiscus.
As part of the cost containment measures the 2018 medium-term expenditure framework made provision for about R110bn for salary adjustments and improvements in other conditions of service for employees falling within the scope of the Public Service Co-ordinating Bargaining Council (PSCBC).
To expedite cost containment measures, the government rolled out several initiatives, such as offering employee-initiated severance packages encouraging public servants aged 55-65 to take early retirement. Other measures included a review of the performance management and incentive system; centralised job grading and evaluation; and more effective management of allowances.
With the conclusion of the negotiations, the government found itself in an advantaged position, while the labour unions were disempowered from advancing higher annual salary demands as their hands were tied due to the multiyear agreement. The government honoured the 2018/2019 and 2019/2020 contractual agreement and implemented salary increases as committed. However, with the outbreak of Covid-19 it reneged on the last leg (2020/2021) of the wage agreement, citing — among other factors — unaffordability induced by the pandemic.
Legally, it could be argued that by failing to honour the last leg the government’s conduct is tantamount to repudiation of a contract. However, these are extraordinary times that call for extraordinary measures, embracing a collective approach for all parties to understand not only the letter of the agreement but also the appropriate spirit of the matter.
A more worrying concern regarding the salary impasse not being amicably resolved is its potential to paralyse service delivery in SA, particularly if the unions successfully convince their members (public service employees) to withdraw their labour in protest. This would be gravely detrimental to the country, compounding the negative impacts of Covid-19 and potentially crippling all spheres of society.
The Public Servants Association (PSA) has sought the judicial route to compel the government to honour the agreement regardless of the fact that it would cost the fiscus an additional R37.8bn in 2020. This amount of tax revenue has already been foregone through arbitrary restrictions on various taxable economic activity. SA’s net loan debt is expected to increase to R3.47-trillion, or 55.5% of GDP, by 2021/2022. Therefore, loading the debt with an additional R37.8bn is a recipe for disaster for future generations.
In a responding affidavit filed with the high court, Mogajane put forward a persuasive argument, calling it unthinkable to give salary increases to already well-paid public servants at a time when a large number of South Africans were losing their incomes. “Granting it would also result in inequitable intergenerational allocation of government debt, requiring future generations to service the debt incurred in respect of current civil servants’ salaries.”
Having spent almost 15 years in the SA public service myself, I believe serving in the public sector is a calling or vocation. As former US secretary of state Condoleezza Rice stated: “There’s no greater challenge and there is no greater honour than to be in public service.”
Empowered with this sentiment, the unions and public sector workers should put aside their grievances and be more grateful to still have jobs, unlike millions of their compatriots who have lost their jobs and stable incomes. Public sector employees must join SA’s collective fight to combat the fallout of the Covid-19 pandemic.
• Dr Moffat is head of the governance delivery and impact programme at Good Governance Africa.
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