President Cyril Ramaphosa has called an urgent but long overdue meeting with organised labour for Tuesday, as the possibility of a further wage freeze, job cuts, and more cuts to government services hang over the country. 

Federations were urgently advised of the meeting two days ago, although it replaces a meeting that had been due to take place last month. 

Labour federations are appalled at the proposals made by the Treasury to national departments and provinces, instructing harsh cuts to budgets, including freezing all public service posts and infrastructure budgets. 

In addition to these cuts, the Treasury has proposed to the Presidency that the government take bold decisions to scrap specific government programmes and entire government departments to reduce costs.

According to those who attended the meeting, it has also mooted reducing the headcount in the public service by offering more attractive voluntary severance packages with a target of cutting 200 000 jobs.

The cuts have become necessary in the lead-up to the medium-term budget policy statement on 1 November as the Treasury faces a perfect storm of low growth, falling tax revenues, and higher borrowing costs. 

'Shocking proposals'

Treasury has also posed the question of funding the R350 social relief of distress grant, which activists and the Congress of South African Trade Unions (Cosatu) want to see made permanent. It has warned that it would need to raise VAT by two percentage points to fund the grant beyond March 2024. 

In a statement responding to a report of the cuts, Cosatu said on Monday that it was "deeply dismayed" at the "shocking proposals". 

"Whilst we appreciate the real fiscal constraints facing the state and the need to cut fat and reprioritise expenditure, the suggestions offered by Treasury of slashing expenditure and further decapacitating the state when the economy is in desperate need of stimulus and a well-oiled and capacitated public services, will only serve to choke the economy and further weaken an already enfeebled government," it said. 

Cosatu suggested instead that government address the main causes of the economic malaise by fixing the energy and logistics constraints crippling the economy.