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CCCI calls for freeze on civil servants’ salaries

SOUTH AFRICA - Cape Town - 28 October 2020- Minister of Finance Tito Mboweni delivered the Mid Term Budget speech in Parliament . Photograph; Phando Jikelo/African News Agency(ANA)

SOUTH AFRICA - Cape Town - 28 October 2020- Minister of Finance Tito Mboweni delivered the Mid Term Budget speech in Parliament . Photograph; Phando Jikelo/African News Agency(ANA)

Published Oct 31, 2020

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JOHANNESBURG - A wage and salary freeze on all civil servants will answer those who correctly point out that they have escaped economic realities, according to the Cape Chamber of Commerce and Industry (CCCI).

One of the more significant signals in Finance Minister Tito Mboweni’s mid-term budget statement this week was not the R10 billion going into the South African Airways (SAA) “money pit which, despite appearances, is to keep our status as a good credit risk”, CCCI president Janine Myburgh said in a statement.

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“It was when he said a salary and wage freeze on the civil service should be a consideration,” she said.

Mboweni had stated that “consideration should be given to the proposal for across-the-board compensation pay reductions to management level positions across national, provincial and municipal governments, state-owned entities, and other senior public representatives”.

Considering something did not mean that it would happen, Myburgh said. But it was at least recognition that the army of civil servants spent money that those in the private sector made.

“Should a wage and salary freeze be imposed on all civil servants it will answer those who correctly point out that they have escaped economic realities. And, since the public servant salary bill absorbs an enormous proportion of tax revenue it has to shrink if we are to avoid a debt trap. Not that the trade unions will agree, of course.”

But the facts were that civil servants at all levels had remained on full pay well above the inflation rate which had steadily eaten into the purchasing power of everyone else. By contrast, many in the private sector had recently either lost their jobs, been compelled to take a cut in income, or put on leave ‘’until the economy recovers”.

Municipal rates, taxes, and their payrolls had reached levels without regard to this reality. Even in Cape Town, which harboured about 27,000 civil servants, increasingly irritated ratepayers had signalled their discontent by withholding their rates and service charges, even those in seemingly-wealthy suburbs.

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Ratepayer discontent was a countrywide phenomenon and the reasons were obvious. Last year, municipal spending increased by 12.2 percent – roughly double the inflation rate – and it was largely driven by employee costs according to Statistics SA, Myburgh said.

After employee costs, the biggest contributors were reported under “other” expenditure and general expenses. “Other” expenditure covered repairs and maintenance, councillors’ pay, departmental fees, and consumables. General expenses included items such as rental, plant and equipment hire, audit fees, accommodation, and travelling costs.

In every municipality, salaries and wages now made up more than a third of municipal budgets. Big city councils spent the most – almost 60 percent of the total national bill. The remaining municipalities and district councils accounted for the rest.

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The best-paying jobs in South Africa were now in the big city municipalities. Unlike those in the private sector, these were safe and secure, offering regular employment until retirement age – an increasing rarity in the private sector, she said.

“Even more extraordinary is that senior management in big city municipalities is paid on a par with senior managers of oil companies, motor vehicle manufacturers, or profitable gold, diamond, and platinum mines, and come with perks on an equivalent scale.”

Paying these salaries depended on rising municipal income. Comparing the first three months of 2020 with the same period in 2019, municipalities pulled in an extra R20 billion which was more than a 20 percent rise. The extra money came from the profit municipalities made on sales of water and electricity.

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One other fact feeding ratepayer discontent everywhere was that thanks to a national agreement engineered through the South African Local Government Association (Salga), all those who worked in any municipality were due to get a 6.24 percent pay rise, Myburgh said.

– African News Agency (ANA)

Related Topics:

Tito Mboweni

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