The National Education, Health and Allied Workers’ Union [NEHAWU] notes the tabling of the Medium-Term Budget Policy Statement [MTBPS] by the Minister of Finance, Enoch Godongwana and calls for a rejection of neoliberal structural reforms.

The 2024 MTBPS is the first to be tabled in the context of the seventh administration, it is also the first to be tabled by the so-called Government of National Unity [GNU] following the outcomes of the 2024 National Government Elections. It is now 15 years since the 2009 recession, on the back of the Global Financial Crisis, with the Treasury incompetently managing macroeconomic policies. Since the fourth administration, National Treasury has been doggedly rolling-out austerity programmes – recklessly cutting the public service wage bill and public services on which the poor are depended, whilst continuing to divert the resources to bailout the poorly run State Owners Enterprises (SOEs), whose executives and boards are not held accountable.

At the very beginning of the tenure of the GNU, National Treasury is already promising the public that it is going to further cut R80.6 billion from the baseline of the non-interest expenditure allocations to government departments, which is likely to cause further cuts and degradation in the quality of social wage programmes supporting the working class and rural-poor. Thus, even though the Treasury claims that “our fiscal strategy supports economic growth and reduces risks to the economy while ensuring fiscal sustainability” this assertion sounds hallow when the same fiscal strategy lays down a pathetic ambition of an estimated ‘real GDP growth of 0.6 per cent in 2023’ and that ‘between 2024 and 2026, growth is projected to average 1.6 per cent.”

Economic and fiscal context

The MTBPS takes place in a context of severe socio-economic conditions facing workers and the poor of this country. Unemployment remains dangerously high, with over 12.4 million people unable to find work (42.6% of population) and one in three youth (7.3 million young people) left jobless. This crisis of social reproduction coupled with the exorbitant cost of living, prevents millions of working class families from sustaining themselves. A lack of adequate nutritious food affects more than 63% of households, with more than one in every four children under the age of five stunted by malnutrition. Neoliberal austerity budget cuts have almost crippled vital public services in health, education and policing with Home Affairs suffering from a 60% vacancy rate.

The current conditions facing workers and the poor are akin to wartime statistics, yet National Treasury cannot comprehend this, or has intentionally chosen to ignore the plight of our people. National Treasury remains fixated on a failed fiscal consolidation trajectory, currently being deepened through fiscal anchoring policies. GDP growth has been stagnant and low, proving that the façade of business and private sector interventions in the sixth administration have not yielded anything of substance, nor in the seventh administration.

The greatest hypocrisy of National Treasury is to not fully appreciate future economic projections as it relates to tackling the crisis levels of unemployment. This is the same philosophy adopted through GEAR; chasing a deficit with marginal growth alongside increasing levels of unemployment, inequality and poverty. Analysts and economists concur that in order to absorb the half a million new entrants into the economy, an annual growth rate of 3% is required.

NEHAWU calls on National Treasury to reverse its approach to fiscal anchor policy options, these steps will ultimately force the state into reneging on fulfilling Constitutional obligations. National Treasury cannot be allowed to morph into a super department, acting autonomously as a judge, jury and executioner. 

Public sector and the public wage bill

National Treasury has consistently used the public service wage bill as an excuse for our economic woes, claiming it to be bloated and out of control and that there needs to be “trade-offs”. By “trade-offs”, the Minister is referring to the inhumane annual below inflation offer to workers. This false narrative peddled by National Treasury is supported by the GNU partners, with the Democratic Alliance openly championing the defunding of public services and the freezing of vital vacancies. The reality is that this cabinet of the GNU is itself bloated, it is nearly double the size of the first GNU of 1994-1997. The seventh administration cabinet is reportedly going to cost the fiscus at least R670 million annually.

Once again, as NEHAWU we call on the Treasury to desist from making pronouncements that are deliberately intended to predetermine the outcomes of collective bargaining process that is underway in the public service at the moment. Any pronouncements on the salaries, retirement arrangements, etc. are merely hot-air as long as they have not been presented at the Public Service Coordinating Bargaining Council (PSCBS). Therefore, matters of the “additional R57.6 billion to pay for the salaries of teachers, nurses and doctors, among many other critical services” must be left alone to the current process that is underway at the PSCBS. It is against this background that we call on all the provinces and in particular, the Free State province, to permanently employ the clinicians or health workers who have been contracted in the wake of the COVID-19 epidemic, instead of terminating their contracts. The Minister has admitted to the country that the public service wage bill has shrunk and not grown as a portion of the budget from 35.7% to a projected 31.4%. This begs the question: Why continue with austerity measures if this neoliberal mission has been accomplished?

It is underwhelming that National Treasury claims that its allocation of a mere R1.4 billion over the medium-term is a demonstration of the government’s commitment to the National Health Insurance (NHI). Therefore, in outlining the system-strengthening measures to improve the public health care system and to lay the foundation for the NHI, we are at the same time dismayed that there is no mention on how government would seek to catch-up with the targets set out by the sixth administration regarding the implementation of the Human Resource for Health 2030 and the commitments from the 2nd Presidential Health Summit. 

NEHAWU welcomes the commitment by National Treasury to fund the building of two new hospitals and a District hospital in Limpopo, our concern however is over the terms of reference for the build-operate-transfer [BOT] structures and concessions, in particular the ownership and running of this infrastructure once completed. We note the annual allocation increases to post-school education and training, health and the public service but are shocked by the cutting of social security funds by 8.5% over the 2024/2025 – 2027/2028 period.

Social security

NEHAWU notes the tacit commitment by National Treasury to sustain the Social Relief of Distress [SRD] grant. However, we are once again very disappointed that a comprehensive plan to expand the SRD grant into a Universal Basic Income Grant/ Guarantee [UBIG] was not made mention of, despite commitments attesting to this in the African National Congress [ANC] 08 January 2024 Statement as well as in elections promises contained in the ANC manifesto.

As the Minister addressed the nation, a High Court case in Pretoria is being heard over the draconian measures put in place by the South African Social Services Agency [SASSA] and the Department of Social Development, restricting millions of potential beneficiaries from accessing the R370.00 SRD grant. Further, NEHAWU will strongly oppose any attempt by the state to convert the SRD grant into a job-seekers grant, the statement by the Minister that “… there is little to no linkage between the social security system and the policy goal of increasing employment” is completely false. Evidence in fact shows that many SRD beneficiaries have used this vital security net to start small businesses. Academics and economists have also proven that grants provide a crucial reprieve to millions of people not having access to any form of disposable income, thus reducing poverty.

Infrastructure and energy

NEHAWU notes the MTBPS commitments to infrastructure, we remain unconvinced that Operation Vulindlela has been the absolute success the Minister presents. In any developmental state, it is the public service and not private partnerships that drive this agenda. NEHAWU has been consistently critical of the rapid move to unbundle the public service, through underfunding, reneging on wage agreements and through the establishment of agencies. The state needs to invest more in the public service, not less. National Treasury needs to bolster investment in capacitating the state and not rely on private interests who place profits over the needs and aspirations of our people.

NEHAWU commends the Minister of Energy, Dr. Kgosientsho Ramokgopa for ensuring that our lights are kept on. The Minister has proven that capacity, dedication and leadership can have a radical impact on many of our socio-economic challenges, in particular electricity generation and supply. We also welcome the drive by his Department to ensure that a balanced energy mix is adopted, no developmental state seeking to build its industry can rely on solar and wind energy alone. In this regard, NEHAWU reiterates its demand and principle for full transparency and meaningful stakeholder participation in the funding and rollout of the Just Energy Transition [JET]. We cannot be focussed on reducing debt if we are taking billion Dollar denominated loans from the western developed nations of the International Partnership Group.

Conclusion

NEHAWU continues to call for a radical overhaul of our monetary and fiscal policies. The baseline alternative scenarios presented in the MTBPS prove that Neoliberal austerity measures will only yield marginal growth whilst increasing our unemployment and poverty rates. The 2024 MTBPS should be considered as a concretisation of continued fiscal consolidation under the GNU coalition. We therefore call on all of our members and society at large to reject austerity and demand that National Treasury reprioritise the budget to ensure the state fulfils its Constitutional obligations to the people of South Africa.

END

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: lwazin@nehawu.org.za