Citizens could be faced with a round of Municipal instability after the SA Local Government Association (Salga), the body representing the 257 municipalities, called for financially distressed municipalities to cut wages in real terms and freeze other perks linked to wage hikes.
The salary bill at Endumeni Municipality already soaks up over 40% of the budget while the maintenance budget for municipal infrastructure is way below the 8% norm.
Salga has proposed a 2.8% wage increase for 2021/2022, below the 2.9% inflation rate recorded in February and the 4.3% average the Reserve Bank expects for 2021. Most municipalities in July 2020 started to implement an agreement that raised wages by 6.25% a year, which some of them had not budgeted for.
The Treasury warned it would compromise their fiscal framework and service delivery. In a statement, Salga said that the municipalities sector has been one of the hardest hit by the Covid-19 pandemic and that these (salary) negotiations represent a critical point in efforts to save municipalities from complete financial collapse.
“SALGA is also proposing a three-year salary and wage collective agreement in order to continue to maintain stability in the local government sector, as well as support the sectors’ sustainability requirements and objectives.
“The labour, represented by two trade unions South African Municipal Workers Union (SAMWU) and Independent Municipal and Allied Trade Union (IMATU) have also formally exchanged their demands
. “Given the devastation on the economy by the COVID – 19 pandemic, macroeconomic and the global economic outlook, the 2021 Salary and Wage negotiations take place against a financially strained environment and the economic damage is evident and represents the largest economic shock the world has experienced in decades.
“SALGA is cognisant of the deep recessions triggered by this pandemic which is expected to leave lasting scars through lower investment, an erosion of human capital through lost work and schooling, and fragmentation of global trade and supply linkages.
“Some municipalities are already unable to afford the current wage costs and would indeed have to apply no more than a zero per cent increase.” Unlike most private businesses, no Municipal employee, including in Endumeni, suffered a pay cut during the hard lockdown.
In July they received an increase of 6,25% increase. More staff were also employed when the new Community Services Department was implemented. Mayor Mdluli has said previously that the salary bill is too high and there ‘will be careful thought given to replacing retiring employees or those who resign’.
