Wednesday November 01, 2023
The National Education, Health and Allied Workers’ Union [NEHAWU] notes the 2023 Medium Term Budget Policy Statement [MTBPS] as presented in Parliament today by the Minister of Finance, Enoch Godongwana.
The 2023 MTBPS was delivered in the context of the deepening unemployment, inequality and poverty and these together have now developed into an all-round and interrelated crisis of social reproduction. Life for workers, the unemployed and the poor has become impossible to sustain, in the face of the fact that about 42.1% of South Africans are unemployed and 60.7% of South African youth are unable to find work.
Economic and fiscal context
The 2023 MTBPS is premised on the narrative that the economic outlook over the medium-term remains weak, which the Treasury attributes to the “cumulative effects of power cuts, the performance of the logistics sector, high inflation, rising borrowing costs and a weaker global environment”. We acknowledge the fact that a few of these factors are indeed objective and therefore independent of the control of the domestic policy makers. However, in the overall we insists that the catastrophic neglect and lack of the timeous state-led investments in electricity, freight rail, ports and rising borrowing costs are largely the results of the failing Neoliberal fiscal and monetary policies.
It is now envisaged that the Tax-to-GDP ratio would decline to 24.7% in 2023/24 from 25.1% in 2022/23 – underscoring the folly of abruptly introducing an unfunded and misguided cut in the Corporate Income Tax by 1% to 27% starting in the 2022 financial year and thus once again clearly debunks the Neoliberal claim that tax cuts lead to an increase in the private investments rate and therefore an increase in revenue. As a consequence of this dogmatic adherence to Neoliberalism, we now shockingly face draconian budget cuts in healthcare amounting to R1.6 billion, to NSFAS amounting to R3 billion and a ludicrous cut of 6.5% to Home Affairs. Clearly, the Treasury is completely tone-deaf in comprehending the impact that these drastic cuts will have on workers, the poor and vulnerable households in South Africa. In addition, as NEHAWU we are completely outraged that the Treasury has announced a R6 billion cut in the allocation to the SRD Grant for 2024, as compared to the R40 billion allocated in 2022. We are totally opposed to this immoral cut in this meagre lifeline for the poor, in the face of the escalating costs of living especially for the most vulnerable households.
Public sector and the wage bill
We note a pompous declaration that the Treasury makes in the 2023 MTBPS that “over the medium-term, government will begin reconfiguring the state to improve efficiency”. However, what has been outlined in the 2023 MTBPS itself to support this declaration is nothing but a range of additional Neoliberal reforms narrowly focused on “efficiency”, rather than on building the capabilities of the state for effective service delivery – in line with the 2019 electoral mandate of building a capable developmental state. The declining headcount of personnel in level 1 to 5 of the public service establishment is largely a result of outsourcing and unfilled vacancies; and this is but one of the factors accounting for the deterioration in the quality of service delivery endured by the majority of the population who are depended on the public services, rather than the lack of efficiency.
The Treasury continues to use a tired and dubious argument that after adjusting for inflation, since the economic crisis of 2008/09 up to last year public spending per person living in South Africa has increased, without taking into account of the population growth rate, especially pertaining to the working class and rural poor for whom public spending constitute the mainstay in their livelihoods, as part of the so-called social wage. Instead, there has been vast deterioration in the delivery and the quality of public services for the majority of the population.
NEHAWU takes note of the fact that the 2023 MTBPS proposes yet another unilateral revocation of a collective agreement – with the 2023/24 wage increase being now only narrowly applicable to the so-called labour-intensive sectors. Once again it is the public servants who appears to be targeted to bear the brunt of the proposed in-year overall R21.7 budget cut.
The Treasury’s clichéd argument and scapegoating of public servants for its fiscal mess has now become even more untenable and immoral as its own evidence show that the growth in the wage bill has been below inflation since 2020 as a result of the draconian austerity attacks and the shameless undermining of collective bargaining. Thus, whilst it acknowledges that since 2013/14 the consolidated public wage bill has declined as a share of consolidated spending from 35.7% to 32% in 2022/23, at the same time the Treasury is still reliant on the rhetoric that “the escalating public sector wages contributed to higher budget-deficits and debt over the past decade”. Worst still, the Treasury continues to peddle the false narrative that “South Africa’s general government wage bill – made up of the public sector and state-owned companies is one of the highest in the emerging economies”, when even the World Bank which is fixated on comparing and monitoring countries in this regard accepts that by nature the general government wage bills are difficult to clearly compare since individual governments have vastly different configurations of general government structures – depending on the extent of privatisations of utilities, outsourcing of services and differences in the subnational government structures, including the fact that other countries do not even have provincial governments.
We note that according to the Treasury, as outlined in the Annexure B of the 2023 MTBPS, that from 2023/24 to 2026/27 there would be an annual average growth of the public service wage bill by 3.7% according to the set fiscal envelope. At the same time, the Treasury is making this projection whilst expecting a 4.5% average growth in CPI over the same period – which means that it is once again expecting to impose a wage cuts on public servants over the medium-term in real terms. This would constitute the further erosion and actually additional wage cuts – on the back of the fact that the public servants’ salaries have not kept up with the rising cost of goods and services – as in real terms they were on average cut by 3% in 2020, 2.9% in 2021 and 2.6% in 2022.
As NEHAWU, we vehemently reject this medium-term austerity budgetary framework and wish to categorically state that as a union we shall put up a fight to resist the further deterioration in the standards and cost of living experienced by public servants, amidst the unfolding conjunctural crisis. Let it be known and noted that we remain resolute in continuing with this fight, even on our own or single-handedly, as our 2023 strike remains suspended and subject to review in the face of the current wave of public sector wage cuts and assault on collective bargaining.
Issued by NEHAWU Secretariat
Zola Saphetha (General Secretary) at 082 558 5968; December Mavuso (Deputy General Secretary) at 082 558 5969; Lwazi Nkolonzi (NEHAWU National Spokesperson) at 081 558 2335 or email: email@example.com