By Siphelele Dludla and Sechaba Nkosi
JOHANNESBURG - FINANCE Minister Tito Mboweni has said Covid-19 has rendered the three year wage agreement with public sector unions was invalid and unenforceable given vastly changed circumstances.
Mboweni told the Labour Appeals Court in his 33-page heads of argument that the enforcement of a Public Service Co-ordinating Bargaining Council clause in the collective agreement would cost the fiscus R37.8 billion
He said the three-year wage agreement signed in 2018 was non-compliant with a mandatory statutory requirement imposed by law to ensure fiscal affordability and sustainability.
“As we have said, in any event, even had there been any tenable contractual claim advanced by the applicants, specific performance is to be refused, at the Court's discretion. It does not qualify as just and equitable relief,” Mboweni said.
“Especially not amid Covid-19 conditions; the history of year-on-year increments, outstripping inflation and outperforming private-sector increases.
“This while the rest of the country's workforce have accepted salary cuts or freezes as a consequence of the economic climate and Covid-19 crisis.”
Public service workers unions took the government to court after it reneged on the multi-year wage agreement, saying it was reached without the necessary Regulation 78 and 79 which require Cabinet approval.
The unions yesterday rejected the last-minute government's proposal to delay the court hearing in a bid to reach an out-of-court settlement.
Public Servants Association (PSA) attorney Chris Orr said the wage increases set at just over 5 percent would only cost the state R10bn.
“It is a question of some concern that the State has repeatedly relied on a figure in justifying many of its arguments in this matter, which is objectively incorrect,” Orr said.
Advocate William Mokhari SC, representing Nehawu, said the government did not approach unions to renegotiate the implementation of the agreement, but simply said the agreement was not valid.
“Covid19 didn't find the South African economy in good shape. Covid-19 was merely the final nail in the coffin. One cannot now blame Covid-19 for inability to pay,” Mokhari said.
But Advocate Jeremy Gauntlett SC, representing the National Treasury, argued that section 79 of Public Service
Regulations was not complied with as it requires Treasury signing off for the provision of additional funds.
The court battle has big implications for South Africa's economic recovery and its efforts to reform public finances.
In October, Mboweni announced that the government will freeze public service wages over the next 3 years to save R160bn.
Mboweni also argued that the government's commitment to cutting public sector wage bill was key to avoiding sovereign debt crisis.
The government now expects gross loan debt to rise to 90.1 percent of gross domestic product (GDP) in the fiscal year ending March 2023, up from 63.3 percent this year.
Public sector employee compensation has grown by 7.2 percent a year on average over the past five years, well above inflation.
An independent study, commissioned by Business Unity SA (BUSA), found that public sector workers' pay was high compared with both international standards and the private sector.
BUSA chief executive Busi Mavuso said that the government, much like business, was going to pivot if it was to stand any chance of staging an economic recovery over the next two to three years.
“That pivot begins with reducing its expenditure to better reflect its revenue outlook – in other words facing up to the harsh reality,” Mavuso said.
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