Finance Minister Pravin Gordhan is standing firm on the need to curb public sector wage increases, even as the ANC’s trade union ally, Cosatu, is gearing up to oppose the government’s position.
“The state has said this is what we can afford,” Gordhan told the Mail & Guardian after delivering his 2012 budget in Parliament this week.
The budget has outlined plans for state-led megaprojects to develop infrastructure and Gordhan is determined to shift government spending from consumption items, such as wages, to investing in items such as long-term infrastructure.
He was clear that improved state capacity and efficiency were necessary to change the budget’s composition, and managing the wage bill differently was one of several ways to achieve this. But it was not about having an “unconstructive contest” over these issues, he said.
Instead, it was important for the government, labour and business to begin urgent discussions to decide what sacrifices each party could make to achieve this shift.
The budget allows for a 5% cost-of-living adjustment for all government employees, excluding pay progression. The aim is to decrease the average real growth of spending on wages from 9.4% between 2007-2008 and 2010-2011 to 1% over the next three years of the budgetary cycle.
Raising hackles
Public servants wages are the largest component of current expenditure and they have increased considerably over the past 10 years, from 35.7% of non-interest spending in 2008-2009 to 38.7% in 2011-2012, according to Budget Review.
But efforts to curb this spending are already raising union hackles.
“We are obviously opposed to it,” said Cosatu spokesperson Patrick Craven. He said there appeared to be a worrying attempt to bypass the public sector bargaining council, through which state wages are negotiated. The state could not arbitrarily impose a limit on public sector wages without a proper discussion with the unions, he said.
“Wages in South Africa are still very low. The fact that public sector workers have done relatively better just reflects how poorly workers in the private sector have done.”
The shift towards spending on infrastructure will rely increasingly on employees in the public sector and state-owned enterprises. It comes just months after Limpopo, Gauteng and the Free State faced near collapse and were placed under the section 100 intervention provided for in the Constitution.
Gordhan acknowledged the state’s “courage and openness” in admitting to these problems, which, he said, should be seen in the context of a young, 18-year-old democracy.
Nevertheless, provincial governments would face further close scrutiny of their financial and management systems.
Provincial accounts
Gordhan has called a special budget council meeting of all the provinces’ MECs of finance in six weeks’ time to confront the ongoing problems in financial and management systems, as well as the issues raised by the auditor general. “They must now account for what they are doing in the provinces,” he said.
In terms of provincial Âleaders ignoring provincial treasuries, undermining their capacity or disregarding their instructions, work was being done to ensure that the treasuries “are protected, strengthened and respected when procurement decisions are made”.
Interventions in Limpopo had taken the province’s shortfall from more than R2-billion to less than R1-billion.
The state’s ambitious infrastructure plans would not rely entirely on provincial or local governments, Gordhan said. Much of it would take place at other levels of government, such as the state-owned entities that had the necessary levels of expertise to deliver.
“We are going to cajole, encourage and, if need be, push to ensure that the right capacity be developed, in the right place, with the right skills and with the right passion to deliver,” Gordhan said. “There are many parts of the state that do work and we understand where our difficulties and challenges are.”