An increase in the wages of public servants – originally due to kick in on April 1, in terms of a wage agreement reached in 2018 – is still on ice after Finance Minister Tito Mboweni announced an ambitious plan in his Budget address to save some R160-billion in the state's wage bill over three years.

One of the criticisms of South Africa's fiscal management by rating agencies has the inability of the state to rein in expenditure, with the growing public sector wage bill a key item highlighted. The state hired more than 190 000 employees between 2007 and 2012, which helped offset job losses after the last global recession. However, the main cause for concern is not necessarily the total number of public sector jobs, but rather that rate of salary increases in the public sector has consistently outpaced the private sector. 

In his address to Parliament in February, Mboweni said the public sector wage bill was expected to be cut by R37.8-billion in 2020/21, in 2020/21, R54.9-billion in 2021/22 and R67.5-billion in 2022/23. "Organised labour understands where we are. They have made constructive proposals on a range of issues," said Mboweni at the time.

But in the immediate aftermath of the announcement, the Congress of South African Trade Unions (Cosatu) President Zingiswa Losi said the wage bill was not bloated, and accused the minister of being "irresponsible" in announcing his plans in his Budget address instead of in a collective bargaining process. 

Unions told Fin24 on Wednesday that the first steps had been taken towards declaring a dispute.

"Cosatu prepared a letter putting them [government] on terms. They acknowledged receipt of our letter. We are completing the referral of a dispute so that we follow the internal processes," Mugwena Maluleke, General Secretary of the South African Democratic Teachers Union and the Congress of South African Trade Unions coordinator at the Public Service Coordinating Bargaining Council, told Fin24 on Wednesday afternoon.

"Our expectation is that the department [of public service and administration] should have processed the payment [of the increases]; however, the department up to so far has not given any indication.

"We are now going to go through the dispute resolution process."

Once the Council appoints a commissioner, a conciliation or arbitration process will follow, Maluleke said.

"We don't think there will be any solution, really, apart from the legal route that is prescribed by the Constitution of the PSCBC," he said, adding that the collective agreement is "legally binding".

Reuben Maleka, Assistant General Manager: Members' Affairs for the Public Servants Association, told Fin24 on Wednesday that the PSA expected the increase to be adhered to as agreed upon in 2018.

He previously argued that this was "a matter of doing what is right".

Approached by Fin24 for comment, Department of Public Service and Administration spokesperson Vukani Mbhele reiterated the department's comments from a statement issued on Tuesday, emphasising that it "continued to look for solutions".

"The Ministry wants to reiterate that the Department of Public Service and Administration is indeed seized with the matter and more importantly, recognises the need to handle everything with utmost sensitivity, respect and integrity," Mbhele said, adding that the department would not be engaging further with media "until the end".

Mounting pressure

However, Mbhele quoted Minister Senzo Mchunu's earlier statement: "We want to reiterate that government remains committed to the implementation of the 2018 wage agreement notwithstanding the aforesaid difficulties, at stake is how to do it, and this matters most."

Mchunu faces pressure from multiple angles, as he negotiates with unions who insist they have already compromised in accepting a lower increase than initially asked for; as well as mounting public pressure to cut expenditure on one of the largest chunks of government spend.

Last week, Moody's Investor Services reduced the country's credit to sub-investment grade or "junk" on their concerns about fiscal management by National Treasury. 

Opposition parties, too, have joined in the fray, with the Democratic Alliance (DA) on Wednesday calling for Mchunu to be sacked if he failed to cut the public sector wage bill by at least R37.8-billion in the 2020/21 financial year.

"Mchunu was issued a clear instruction by Finance Minister Tito Mboweni during his February budget: cut the public wage bill by R37.8-billion in 2020/21, by R54.9-billion in 2021/22, and by R67.5-billion in 2022/23, totaling R160.2 billion," said DA spokesperson on finance Leon Schreiber.

Failing to do so would "condemn an entire generation of South Africans to debt servitude" and amount to "fiscal treason", Schreiber said.

Meanwhile, unions have said that for now, they will follow through with the bargaining process to reach a resolution.

Asked whether there was a prospect of mass action during lockdown or the coronavirus outbreak, Maluleke said that legally the process would be to continue with conciliation or arbitration.

"Legally the recourse we have is the court route. For the moment there will be no mass action. That is my understanding in terms of the law," he said.  

However, he added, it was "really incredible" and "regrettable" that public servants found themselves negotiating with government over the existing wage deal.