President Cyril Ramaphosa shares a light moment with Minister of Finance Tito Mboweni. Mboweni presented his Budget speech in the National Assembly yesterday. Elmond Jiyane GCIS

Cape Town - Cosatu has drawn a line in the sand over President Cyril Ramaphosa’s plan to trim the public sector and the unbundling of troubled power utility Eskom.

The trade union federation, an alliance partner of the governing ANC, came out guns blazing on Wednesday against some announcements by Finance Minister Tito Mboweni.

Delivering his maiden Budget speech, Mboweni said the government would cut the public sector wage bill by R27 billion over the next three years; and this year freeze salary increases for members of Parliament, provincial legislatures and executives at public entities.

Mboweni walked a tightrope on Wednesday in his speech, noting the government would collect R15.4bn less than its estimate in October.

Economic growth - crucial in job creation - will remain sluggish, with a projected gross domestic product growth rise of 1.5% this year and 2.1% in 2020.

According to the Budget Review document, if approximately 30 000 of the 126 710 public servants aged between 55 and 59 took up the offer of early retirement, it could save the government around R20.3bn.

“The public wage bill is unsustainable. We must shift expenditure to investment,” Mboweni said. The first step is to allow older public servants, who want to do so, to retire early and gracefully.”

In the face of stiff opposition, Mboweni said the government was going ahead with the unbundling of Eskom, and it had also attached strict conditions for a R6.8bn guarantee for the SABC, including a restructuring of the state broadcaster - a move that is seen by some unions as a way of cutting jobs.

The minister said the government would inject R23bn into Eskom this year to help pay its debt.

“We are saying Eskom has a debt and they must service it. The R23bn a year is meant to pay their debt. It’s not meant for salaries,” Mboweni explained.

This has raised the ire of Cosatu, which played a crucial role in Ramaphosa’s elevation to the Union Buildings. Cosatu’s national spokesperson Sizwe Pamla said the federation’s unions in the public service would not accept attempts to trim the public sector wage bill.

“He knows the government cannot unilaterally impose those adjustments to workers. I think he was just doing it to show off or to pacify investors, because our unions will oppose that thing. They will first have to go and present that at the bargaining council for labour to consider it. We will accept or reject it,” Pamla said.

Pamla said the Budget was the final proof to the federation and its unions that Ramaphosa’s administration had no tangible plans or ideas other than wanting to punish workers.

“How can you want to introduce early retirements when you do not have a proper ratio of nurses, doctors, police and teachers in the public service? They want to fire experienced people,” he said.

He said the public sector wage bill, which is around 35% of GDP, had been stable and that there was no need to cut it at the expense of workers. “They have run out of ideas to address youth unemployment so they want to replace them with their parents. Getting rid of experienced workers when you don’t meet the ratios, what you are doing is decimating the public service.

“The SABC announcement does smell of plans to ensure retrenchments. These people must just come out and say whether they have a plan for the SABC or not. There has been ample of time to explain these measures and what they mean when the president was addressing Parliament during his State of the Nation Address and when he was replying during the SONA debate,” Pamla said. 

The ANC said it would meet with Cosatu in the near future regarding Eskom, after the federation’s central executive committee. On Monday, a meeting – where Ramaphosa was present – between a cabinet committee on Eskom deadlocked.

ANC treasurer-general Paul Mashatile said on Wednesday the unions were key in the Eskom matter. “We have been meeting with Cosatu and the National Union of Mineworkers and we explained to them that the unbundling is not part of privatisation,” said Mashatile.

“We will continue to talk to the unions,” he said, adding that Mboweni had delivered a tough Budget. The SA Federation of Trade Unions also slammed the Budget, saying it was “a savage attack on the workers and poor” and that there was going to be a mass shutdown on March 26-27.

“He announced no increases in corporate taxes on businesses, said nothing about a wealth tax on the super-rich, and no rise in income tax, which is at least higher the more you earn.”

On the cutting down of the public sector, the federation said in a statement: “These soothing words hide a plan to butcher jobs in the public service, at a time when there is a desperate shortage of teachers, doctors, nurses, community health workers and staff in all the other public services.

Political Bureau