Public sector union wage demands could cripple economy – expert

The already bleeding South African economy could be further wrung by R20 billion, should government accede to public sector union wage demands, recently dismissed by a Labour Appeal Court ruling over salary hikes, according to an economist.

Public sector unions like the South African Democratic Teachers’ Union (Sadtu), which recently suffered a blow at the Labour Appeal Court on compelling government to implement the third year of increases, said on Monday they were preparing to take the matter to the Constitutional Court.

“Our problem is that we don’t have the money to pay them. If we end up paying them, we will be another R20 billion into the red, which we cannot afford,” warned economist Mike Schussler.

“We already cannot afford the SAA (SA Airways) or pick up Prasa (Passenger Rail Agency of South Africa) right now.

“The budget deficit hole that we are digging is going to be bigger. Our interest rates are going to go up.

“If they don’t win at the Constitutional Court and take a strike action, it will also impact the economy, because they are going to disrupt part of it,” Schussler said.

“Already this economy is well disrupted by the Covid-19 and the lockdowns.

“Public sector unions are being unrealistic, because pressure for public wage increases is going to hurt, taking away from our potential future economic growth.”

In dismissing the application by public sector unions, seeking to force government to implement salary increases for 2020, the Labour Appeal Court ruled that clause 3.3 in the wage agreement, signed in 2018, infringed on the mandatory legal requirements governing the conclusion of wage agreements by government.

Public sector unions sought an enforcement order of the agreement, which guaranteed employees in the sector wage increases of up to consumer price index plus 0.50%.

Government argued that it could not afford this, as it worked on recouping R160 million from the compensation bill in the next three years.

Treasury submitted during court proceedings that it never gave the green light for the wage hikes as required by law.

Upbeat about a possible Constitutional Court win, Sadtu general secretary Mugwena Maluleka said: “Our demands are very realistic. We are mindful of the state of the country’s economy.

“What we don’t want to have is a precedent in the country, where an agreement will be declared unlawful on the basis of money, instead of an order to go back and renegotiate.

“The problem is that many employers are going to rely on this particular Labour Appeal Court outcome and its ruling, to the extent that they will unilaterally start moving out of collective agreements that they have signed.

“Obviously we are going to the Constitutional Court with an understanding that we have grounds that we will have a different outcome.”

Asked about the bloated public service, Maluleke said: “Government knows that they need more nurses, more engineers, more healthcare workers. And they also know that they need school administrators and more police.

“Look at the ratio between a nurse and the people she has to serve in rural areas where there are long queues, which is abnormal.”

– brians@citizen.co.za

For more news your way, download The Citizen’s app for iOS and Android.