LETTER: Doing the maths on public-sector job cuts
The 2020 budget was all about trimming the public-sector wage bill — which translates to more than 140,000 lost jobs
I read in Business Day that “the Treasury strongly opposes the assertion that its fiscal stance is one of austerity” (SA’s latest budget is not one of austerity, says Treasury, March 8).
Instead of spinning the issues and trying to start Mickey Mouse debates, the Treasury should declare how many public-sector jobs they think would be affected by a cut in the main budget’s “public-sector wage bill” by R37.807bn, as of April 1.
In a spreadsheet circulated to public-sector unions by the Treasury, an account is made for the labour costs of 1,392,505 public-sector employees in December 2019. At that point in time, the total, annualised wage bill for all of them was calculated at R367.1bn (total cost to employer). The spreadsheet is precise down to the single rand, but for the purpose of asking a simple question I have rounded it off.
The wage bill in the spreadsheet is obviously related to the main budget and not to the larger consolidated budget that includes more government entities. Once again, it is from the main budget that the R37.8bn wage cut is supposed to be done in 2020/2021, according to page 25 in the Budget Review.
If the annual cost to the employer for 1,392,505 employees is R367.1bn, then the average labour cost for one public-sector employee is R263,656 per year.
We then only have to divide the proposed R37.8bn cut in the public-sector wage bill by the average, annualised labour cost of R263,656, to find that the budget cut corresponds to 143,395 public-sector jobs.
Well, if there are no further wage increases that is, which the Treasury suggested one day before the budget speech when announcing to the unions that the government had withdrawn from the existing three-year wage agreement.
The 2020 budget means, in fact, that a wage increase by more than 0% this year must be “balanced” against the proposed R37.8bn cut in the total wage bill. Failure of the Treasury to tear up the agreement and achieve a wage freeze (a wage cut in real terms by some 4% at today’s inflation rate) will mean even more retrenchments in the coming year than 143,000.
We are speaking of the first budget year alone. The wage bill cuts in the coming two years are R54.9bn and R67.5n, respectively. It is all on page 25 in the Budget Review.
Clearly, the Treasury must have thought about how many tens of thousands of public-sector employees that will also be retrenched in the following two years, if this budget proposal is accepted by parliament?
Maybe, in defiance of critics, former president Thabo Mbeki once said “Just call me a Thatcherite”. Compared to the 2020 budget, he must have been joking.
Dick Forslund, Alternative Information and Development Centre
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