Salga’s wage deal: To pay municipal workers more or to fix collapsing areas?

The South African Local Government Association (Salga) has signed a five-year salary and wage collective agreement for 300,000 municipal workers, while most municipalities are failing to deliver basic services effectively.

The latest Auditor General’s report reveals a significant drop in the number of municipalities that have received clean audits while the anti-corruption advocacy group, Organisation Undoing Tax Abuse (OUTA), has attributed the failure of municipalities to deliver basic services to unproductive staff and a lack of finances.

The South African Municipal Workers’ Union (SAMWU) made the wage increase announcement on Monday, describing the agreement as a first of its kind in the public service history.

After three rounds of negotiations with the South African Local Government Bargaining Council (SALGBC), municipal workers will receive a 6% wage increase, and consumer price inflation (CPI) linked increase.

The increase comes while some areas in the country are battling with access to quality water, drivers having to drive like they are navigating through a maze due to potholes, deteriorating infrastructure, and sewage spillages, amongst other challenges.

Increase breakdown

In SAMWU’s press statement, the agreement was reached and signed on Friday, 6 September and it will take effect from 1 July 2024 to 30 June 2029. “This agreement represents stability, consistency, and long-term benefits for municipal workers across the country.”

The increase breakdown details that workers will receive a 4.5% increase effective from 1 July 2024 and an additional 1.5% increase payable by 1 March 2025. The union is of the view that the staggered increase ensures that municipal workers begin to receive the benefits as soon as possible while also easing the financial burden on them.

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CPI linked increase

The agreement also includes a salary increase of CPI plus 0.75%. This will be done in the 2025/26 and 2026/27 financial years. “This ensures that wage growth will remain above inflation, maintaining real income growth and safeguarding workers’ purchasing power.”

“For the 2027/28 and 2028/29 financial years, salary increases will be pegged at CPI plus 1.25%, offering even greater real wage growth for municipal workers.”

Housing allowance 

The union said all conditions of service linked to salary increases, like allowances will increase by the same percentage in all financial years. However, in the first year of the agreement, Housing Allowance and employer contributions to medical aid will increase by 4.5%.

Employees who do not receive housing allowance, earning R22,000 per month or less will receive a once-off payment of R2,000 in the first year of the agreement. The union views this part of the agreement as an acknowledgement of the urgent need for housing support among low-income workers.

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Municipalities failure

Most of the municipalities are battling with servicing their debt to waterboards. Minister of Water and Sanitation Pemmy Majodina previously announced that the municipal debt to water boards sits at R21.3 billion.

Julius Kleynhans, executive manager for local government at Organisation Undoing Tax Abuse (OUTA) told the Citizen that employees deserve fair compensation for their work, however, most municipalities are currently financially unsustainable.

“The infrastructure is deteriorating, and many areas are struggling with financial mismanagement, corruption, and a lack of accountability.” He believes the focus should be on improving service delivery and restoring public trust before considering wage increases.

Striking a balance

Kleynhans added it would be wiser for municipalities to cut costs and tie wage increases to measurable future improvements in service delivery and performance.

“Increasing wages without addressing the systemic issues that plague many of them could further cripple their ability to deliver essential services and those determining wage negotiations should know this.”

He said it is about striking a balance. Municipal workers are essential to the functioning of local governments, but it is impossible to ignore the broader context of municipal collapse and the urgent need for reform.

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Decline in most municipalities

The recent auditor-general’s report painted a horrifying picture of only 34 out of 257 municipalities receiving clean audits for the financial year 2022/23. This has raised great concern as municipalities continue to ignore the law, mismanage projects, and pass budgets that they cannot afford to implement.

Kleynhans said it is unacceptable for municipalities to fail in their fundamental duty to manage public resources responsibly and provide basic services to the people.

The AG’s report detailed that 110 municipalities received unqualified audits with findings, 85 qualified with findings, 6 adverse with findings, and 12 disclaimed findings.

AG’s key findings

Key findings in the report include weak performance planning and reporting processes, poor project and contract management, inadequate internal controls, persistent issues with unauthorised and wasteful expenditure and a deterioration in service delivery.

“City of Ekurhuleni Metro (Gauteng) regressed from a clean audit to an unqualified audit opinion with findings due to lapsed procurement and contract management controls,” reads the report.

Another metro which regressed from an unqualified audit opinion with findings to a qualified audit opinion is Buffalo City Metro in the Eastern Cape, this is due to internal control deficiencies.

Mangaung Metro Municipality in the Free State once again received a qualified audit opinion because audit action plans were not effectively implemented to address prior-year qualifications and poor record keeping.

Both eThekwini in KwaZulu-Natal and the City of Johannesburg in Gauteng retained last year’s outcome of an unqualified audit opinion with findings.

Improvements in Municipalities

The AG’s report also stated there have been pockets of excellence and improvement in some metros. For example, the City of Cape Town Metro in the Western Cape has retained its clean audit status over the administrative term.

When it comes to the Nelson Mandela Bay Metro in Eastern Cape, there has been an improvement in its audit outcome from a qualified audit opinion in 2021-22 to an unqualified opinion with findings. This is attributed to addressing the multiple material misstatements in its financial statements.

“City of Tshwane Metro (Gauteng) improved its outcome from an adverse audit opinion to a qualified opinion by taking steps to implement prior-year audit recommendations.”

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