COSATU rejects the National Treasury’s statement on the exclusion of public servants from pension withdrawals

The Congress of South African Trade Unions (COSATU) has noted with alarm the National Treasury’s announcement that public servants will be excluded from any pension funds withdrawals. While this outrageous statement is unacceptable, we are not shocked by such blatant provocation of public servants coming from the National Treasury.

The Federation has consistently identified the National Treasury as the chief bastion of resistance in government against the progressive socioeconomic policies. These are the same people who have spent the better part of the last two decades pursuing wrong-headed and cartoonish ideas to try to fix the economy.

The Federation rejects this unwarranted isolation and victimisation of public servants. This represents an intensification of the offensive against public servants by this administration.

Retirement savings are hard-earned deferred wages of workers, and the National Treasury is ill-qualified to tell workers that they cannot access them while experiencing financial difficulties. This arrogant statement is tantamount to the infantilization of workers. Workers do not need to be lectured by ineffectual government bureaucrats about their money.

For the last two decades they have proven themselves to be immensely incompetent and have mismanaged the economy to the ground. The mess we are in was caused by their misguided policy choices.

COSATU in making this proposal to social partners at Nedlac, last year, was informed by the depressing levels of indebtedness faced by many workers and households in South Africa.

According to the Debt Counselling Association, about 10 million people in South Africa have bad debt, meaning they have missed three or more monthly repayments. These people have an average of eight loans each. On average people in bad debt spend 63% of their after-tax income on repayments.

According to the South African Reserve Bank, almost 73,7% of households’ income is spent on debt. At the same time consumer spending contributes 60% to the economy. Last year the SA Human Rights Commission revealed that more than 50% of South Africa’s credit-active consumers (19 million) were over-indebted.

The outbreak of the COVID-19 virus has worsened an already bad situation and public servants have not been spared. The unilateral imposition of a three-year wage freeze that started with the non-implementation of Resolution 1 of 2018 has left many of them struggling to keep up with their debt repayment costs and the cost of living.

About 62% of public servants do not have houses and it was the same National Treasury that disrupted the establishment of a Government Employees Housing Scheme by forcing it to be placed in the hands of the private sector.

The apprehension about the over-indebtedness of public servants is even more urgent for government because overindebted public servants are vulnerable to corruption. This proposed exclusion will undermine the fight against corruption.

Already, there are many government employees who are moonlighting in the private sector to supplement their incomes.

It is unacceptable that the same public servants that have been designated as essential service workers, and who have led from the front in the fight against COVID-19 are being singled out and forced to live lives of brute survival.

This senseless statement is being made after many workers have seen heavy price increases on electricity and fuel. This has a knock-on effect on the price of goods as transport costs rise, while the general price of living goes up relatively in response. The reason these National Treasury bureaucrats are so recklessly indifferent to the plight of workers and public servants in particular is because they pay no price for being wrong.

This is an act of bad faith that is going to undermine engagements at Nedlac and poison an already toxic relation between President Cyril Ramaphosa’s administration and public servants.

COSATU will be seeking an urgent meeting with Minister Godongwana and Treasury to address these concerns and to ensure that a Bill is tabled at Parliament by the end of 2021 to allow all workers to access a portion their pensions. If this is not expeditiously done, the current unsustainable rate of over indebtedness will push the workers and the economy over the edge.

Issued by COSATU
Sizwe Pamla (Cosatu National Spokesperson)

Tel: 011 339 4911
Cell: 060 975 6794