Public Service and Administration Minister Senzo Mchunu. Picture by: S'bonelo Ngcobo/African News Agency (ANA) Archives
Public Service and Administration Minister Senzo Mchunu. Picture by: S'bonelo Ngcobo/African News Agency (ANA) Archives

Government can’t borrow R70bn to increase public servants’ salaries, says Senzo Mchunu

By Loyiso Sidimba Time of article published Jul 23, 2021

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Johannesburg - Public Service and Administration Minister Senzo Mchunu has warned that the government would have to borrow over R70 billion to comply with the agreement to increase public servants' salaries it failed to honour last year.

Mchunu filed his written submissions ahead of next month's Constitutional Court battle between unions representing state employees and the government over the failure to increase their salaries in 2020.

The agreement reached at the Public Service Co-ordinating Bargaining Council (PSCBC) in 2018 would have seen salaries increase by between 4.4% and 5.4% agreed with effect from April 1, 2020.

”If enforcement of clause 3.3 (of the agreement) was ordered, the government would have to borrow in excess of R70bn, just to pay R37.8bn in the 2020/21 period. It would then have to borrow again, or reduce the funding going to other budgets, to fund the cost of clause 3.3 into the future,” read the submissions filed on Mchunu’s behalf.

The R37.8bn Mchunu referred to in his court papers is the amount the government would have paid last year had it implemented the PSCBC resolution.

Initially, when the deal was sealed the deal would have cost R30.2bn.

According to Mchunu, Parliament allocated only R128.5bn in public money to fund the cost of the compensation envelope for all public service employees between 2018 and 2021.

”Of that amount, R110n was allocated to fund the cost of compensation (the fiscal envelope) for employees in the bargaining unit (or the cost of the collective agreement … The balance of the R18.5bn was allocated for the remuneration of public service employees at salary levels 13 to 16 and who are not in the bargaining unit,” he explained.

The unions are challenging the December 2020 decision of Acting Labour Appeal Court Judge President Mmathebe Phatshoane, retired Judge Dennis Davis and Judge Phillip Coppin declared that the wage hikes were unlawful as they contravened the Constitution and parts of the Public Service Regulations.

Labour unsuccessfully took the government to court after public servants’ salaries were not increased from April 2020.

Mchunu’s finance counterpart Tito Mboweni has complained that the three-year deal signed in 2018 imposed a burden of billions of rands on the fiscus and that available funding did not exist then and does not exist currently.

”The agreement is invalid for non-compliance with a mandatory statutory requirement,” read Mboweni’s submissions.

He continued: “The unions and their members demand a third year-on-year increase of salaries above inflation. This despite the fiscal crisis caused by the pandemic and despite many other employees either having lost their jobs, or stare unemployment in the face, or sacrificed salary increases, or suffered salary decreases”.

Mboweni said it is not fair or just to enforce clause in circumstances where this would necessarily impede the government’s ability to protect the lives and livelihoods of vulnerable people exposed to the severe consequences of Covid-19.

But Mboweni maintained that the enforcement of the clause in the current circumstances would infringe the Constitution and rights entrenched by the Bill of Rights.

The National Education, Health and Allied Workers’ Union said the Labour Appeal Court relied on factually incorrect figures in its judgment.

”More specifically, it is factually incorrect to assert that clause 3.3 of the agreement exceeds the compensation envelope of R37.8bn. The true figure is R13.2bn,” read the union’s submissions.

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Political Bureau

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