KHAYA SITHOLE: Union support for ANC tied to public sector wages

One of the great constants in SA public life since 1994 has been the complicated relationship between the ANC and the trade union movement. The origins of the relationship can be traced back to pre-1994 days when the activism of the union movement played a significant role in driving opposition to the apartheid government while the ANC was banned.

The relationship was solidified after the ANC’s unbanning, when the union movement and ANC forged an alliance whose influence on the modern state remains evident. In its initial days the strength of the relationship was obvious. As the ANC sought to draft a road map for governing the state the influence of the union movement on the party resulted in major victories with regard to the protection of labour rights and the commitment — and eventual realisation — of the minimum wage regime.

In exchange, the union movement remained a committed and loyal partner at the voting booth, in spite of the ideological differences that have been creeping in since inception and were explicitly pronounced when former president Thabo Mbeki declared in 2007 that the ANC was not, after all, a socialist party.

Such utterances played a critical role in the resolve of the unions within the alliance to support Mbeki’s competitor, Jacob Zuma, at the Polokwane conference in 2007. The hope harboured by unions was that their waning influence on the ANC would be restored under Zuma. However, lost to the unions was that their problems transcended the alliance question. The decline of traditionally union-heavy industries such as mining and manufacturing, which ceded employment capacity to tertiary sectors, meant the collective clout of the unions was fast waning.

Their last remaining stranglehold on the ANC was in the heavily unionised public service. This bargaining chip — electoral support — has been partly blamed for the ballooning civil service wage bill, which has been a headache for multiple ANC finance ministers. In 2008 the public service wage bill amounted to just more than 31% of consolidated government spend, but by 2020 it had escalated to 41%.

Core to the problem has been the fact that the proxy for well-negotiated civil wage increases — inflation — has remained within the SA Reserve Bank’s target range of 3%-6% for most of that period. Unfortunately, growth of the economy, which should correlate with the ability of the state to fund all its commitments, has been perpetually below that. This has resulted in the untenable phenomenon of the wage bill growing faster than nominal GDP.

The government’s solution up to now has been to borrow through the problem. This has placated the political problem while escalating the economics problem. In 2020 then finance minister Tito Mboweni tackled it by simply refusing to honour the multiyear wage agreement, and somehow got the support of the Constitutional Court, which agreed that such commitments were not always binding in light of state resource limits.

The problem with that legal solution is that it eroded the long-standing trust between the state and its employees. It is therefore not surprising that in the current wage negotiations the gap in expectations remains as wide as it is. While the government argues it can ill-afford anything beyond 3%, the unions insist 10% is a fair increase in light of the squeeze on incomes.

While one can empathise with workers whose incomes have been decimated by the inflation and cost-of-living crisis, it is difficult to imagine that a fiscus that has committed to inheriting Eskom’s debt burden can agree to such an increase. One of the Treasury’s focus areas — lowering the country’s cost of borrowing through improved credit ratings — requires it to continuously exhibit a commitment to fiscal discipline.

This puts it in the firing line against many government departments and public servants. How strongly the Treasury can hold the line this time will be instructive for the country’s finances, and the ANC’s political prospects in 2024.

• Sithole (@coruscakhaya) is an accountant, academic and activist.