South Africa will soon know the outcome of a meeting between organised labour and President Cyril Ramaphosa about the biggest wager proposed by last week’s national budget statement – slashing the civil service wage bill by R160 billion over three years.
Last week’s budget statement was widely welcomed by industry mainly because of the news that government was serious about cutting costs.
One of the biggest belt-tightening exercises, Finance Minister Tito Mboweni said, would be saving R37.8 billion over the next twelve months as a start towards achieving the bigger target of R160 billion.
Hardly had Mboweni read that part of his statement – to much applause from Parliament – than the Public Servants’ Association tweeted that it rejected the decision.
Labour federation Cosatu chimed in saying workers were being thrown under the bus by a government incapable of balancing its books.
And earlier this morning, after it was reported that Ramaphosa would be meeting with the National Economic Development and Labour Council about the matter, Cosatu spokesperson Matthew Parks accused the government of acting in bad faith.
At issue, he said, was an earlier three-year agreement between labour and government that the civil service wage bill would not be slashed.
If necessary, he said, it was an agreement Cosatu was willing to litigate over.
Mboweni though has made it clear on a number of occasions that the wage bill simply has to be cut, as it is one of the prerequisites for Moody’s ratings agency to maintain the country’s last investment grade rating.
With labour now threatening to go to court, and most likely embarking on countrywide mass action, Mboweni’s “good-news” budget could come a cropper in its attempts to win the agency’s favour.
Moody’s has already expressed its misgivings about whether the budget can be implemented given the reaction it will elicit from labour.
The agency’s decision on whether to maintain the country’s investment grade or “junk” South Africa’s sovereign debt, making it the third ratings agency to do so along with S&P Global and Fitch, will be made within the next few days.
