The National Education, Health and Allied Workers’ Union [NEHAWU] notes the decision of the western sovereign rating agency, Moody’s, on the 27th March 2020 to cut South Africa’s credit rating to Ba1 with a negative outlook.

This decision, which is the first in 25 years, takes place against the background of a mystifying austerity programme announced by the Finance Minister, Tito Mboweni, during the Budget Speech on the 26th February 2020. Accordingly, Moody’s cites the three main causes, i.e. the unreliable electricity supply, persistent weak business confidence and investment as well as the “long-standing structural labour market rigidities.”

It is unfortunate that since 2015, government has been doggedly seized with budgetary cuts to meet the policy dictates of the sovereign rating agency in which non-interest expenditure was restrained to 1.6% rather than forging a new sustainable socioeconomic development path. As a result, the economy has been strangled, lurching from one technical recession to another, amidst rising unemployment, poverty and inequalities. This has been devastating on the masses of our people, the overwhelming majority of which are black, women and youth. This tragic fiscal policy stance, which when combine with the South African Reserve Bank’s conservative monetary policy, has given our economy no chance but to plunge into a stagnation trap.

Once again, upon his announcement of further budgetary cuts during the recent Budget Speech, in which he singled out the public service workers under Public Service Coordinating Bargaining Council (PSCBC) to wrench about R160 billion from their livelihoods over the next three years, NEHAWU warned that this was a recipe of a disastrous path that would plunge our society into a downward spiral of socioeconomic crises. In the medium-term, we now face grim prospects of Mboweni’s vicious cycle of an austerity programme that would cause deep economic contraction, leading to revenue shortfalls, then further budgetary cuts that would result in further borrowing whilst the socioeconomic situation deteriorate further. These are the catastrophic results of the reversion to the crude Neoliberal toolbox since the fifth democratic dispensation.

We also note that even the depraved Moody’s recognises that this attempt to cut the public service wage bill “would mark a material departure from current agreements and past outcomes” and will be “challenging to implement.” Thus, once again, as NEHAWU we reiterate our position that this move is unrealistic, especially in the face of relentless profligacy across the SOEs, government agencies, government components and the outsourcing contracts.

NEHAWU rejects Moody’s notion of the “long-standing structural labour market rigidities”, which makes no sense in the midst of relentless job losses in the economy and flies in the face of the global commitments of other legitimate multilateral institutions such as the International Labour Organisation and the United Nations. Now all Mboweni calls for is unity and to “work together to address our challenges”, when he has been arrogantly singling-out the public service workers all along. His disastrous policy document which was imposed to replace the ANC-led Alliance manifesto, is now an abject failure from the beginning. We shall await the 1st April 2020 to see if he would renege the 2018 Collective Wage Agreement of the PSCBC and honour the dictates of the western sovereign rating agencies in undermining collective bargaining.

We reiterate the position of our federation, COSATU, which has been calling for a comprehensive and targeted stimulus package. It is only through economic growth, rather than the suppression of demand through fiscal austerity combined with the still extremely conservative monetary policy stance, that our economy can grow out of the currently devastating quicksand. 

Issued by NEHAWU Secretariat

Zola Saphetha (General Secretary) at 082 558 5968; December Mavuso (Deputy General Secretary) at 082 558 5969; Khaya Xaba (NEHAWU National Spokesperson) at 082 455 2500 or email: