The Congress of South African Trade Unions (COSATU) will present its response to and proposals on the Medium-Term Budget Policy Statement’s 2nd Division of Revenue Amendment Bill to Parliament’s Appropriations Committees at 9am, Friday 13 November (virtual public hearings).

 The Federation has engaged extensively with government and business on the Economic Reconstruction and Recovery Plan (ERRP) at Nedlac.  The gap between the focus of the ERRP on saving jobs and companies and mobilising financial resources to stimulate a fragile economy; as compared to the MTBPS’ narrow focus on imposing a 4-year wage freeze on public servants to reduce public debt is problematic and sends mixed messages as to the government’s priorities.

 We agree that the debt trajectory needs to be curbed because we cannot afford to go to the IMF.  But in the midst of the worst economic crisis in 100 years, 2.2 million job losses, 52% unemployment, and thousands of companies that may be lost, the focus has to first be on how to save and create as many jobs and businesses as possible.  Those jobs and companies need to be assisted to survive so that they can help the state to stabilise the fiscus.  Stifling the economy when it’s on its knees of badly needed liquidity, is as good as pulling the plug on a patient at a hospital.

 The only form of stimuli during this period has been the R51 billion from the UIF and the increase in social grants.  It is an indictment on the government’s commitment to stimulating the economy that it is in fact workers’ monies from the UIF, the PIC, and the pension funds that are holding this economy together.

 The government is misdiagnosing the cause of the fiscal crisis.  It is not the public servants’ wage bill, which has been stable at 35% of the budget since 2009 and whose headcount to population ratio has plummeted since 1994.  The state is in a fiscal and debt crisis but it has allowed 10% of the budget to lost to corruption and wasteful expenditure, the SOEs to be run into the ground and thus requiring massive bailouts, SARS to be gutted during the state capture era and thus allowing billions lost to tax and customs evasion, and declining tax revenues due to a stagnant economy and rising unemployment.  These are the hard tasks that need to be fixed if the government is serious about dealing with the fiscal and debt crises.

 The government needs to engage in good faith with public servants on the next 3-year wage agreement.  It must honour the existing wage agreement which is the lowest in a decade.  The state’s hypocrisy in praising public servants for carrying the nation on their shoulders during the lockdown and then wanting to dump the bill for politicians mismanaging the state on them is contemptuous.  Workers will not take government seriously until it slashes the exorbitant packages it provides political office bearers and management by 30% and begins to tackle the pandemic of corruption.

 The heart of the 2nd Division of Revenue Amendment Bill is the wage freeze over the next 4 years.  Once inflation takes its effects is a wage cut imposed upon workers.  Parliament’s endorsement of the Medium-Term Expenditure Framework is giving wind to the government’s attempts to collapse workers’ constitutionally guaranteed rights to collective bargaining.  The adoption of the MTBPS will render engagements at the PSCBC meaningless.

 COSATU appreciates the need to shift funds within government to reinforce the fight against Covid-19, to provide badly needed economic and social relief, and to help rebuild the economy.  Allocations for the employment of additional community health workers, nurses, and teaching assistants is welcome.  But clarity is needed that these will be permanent positions and paid according to the prescripts of the public service and not a source of temporary, cheap, and vulnerable work.

 The projected freeze on allocations to critical frontline departments e.g. Basic Education, SAPS, Home Affairs, and Agriculture and Land Reform will hamper service delivery.  The impact of the R17 billion cut to local government and its ability to roll out infrastructure will undermine the ERRP’s implementation.

 For further information please contact: Matthews Parks Parliamentary Coordinator Cell: 082 785 0687- Email: matthew@cosatu.org.za