Unions threaten to strike over spending cuts

South Africa’s largest labour union federation is threatening to go on strike if the government backs proposed austerity measures, which could include reneging on a public sector wage agreement.

National Treasury will present President Cyril Ramaphosa with a cost-saving plan in coming weeks to help tackle the country’s revenue shortfall and budget deficit. Options include increasing taxes and slashing the number of government departments and state-owned enterprises. The alternative is issuing more debt — a prospect that’s hit South African bonds in recent days.

The Congress of South African Trade Unions (COSATU) was part of a delegation of labour leaders who met with Ramaphosa on Tuesday, where they told him that the Treasury’s suggested steps would undermine public services.

“We think the Treasury proposals on a freeze on vacancies, reducing the headcount, cutting departments, cutting programs, is going to collapse the capacity of the state,” said Cosatu spokesman Matthew Parks. He said that Ramaphosa assured them that the measures were still a draft and remain under discussion.

The president’s office said separately that the unions had agreed to help tackle key problems hobbling the South African economy, including rolling power cuts, a jammed freight logistics infrastructure and violent crime.

“Given the scale of the challenge, we require support from all social partners to urgently accelerate implementation of government’s plans,” Ramaphosa said in a statement released after the meeting.

Wage deal

A key Cosatu concern is what happens to a public sector wage agreement struck in March that granted workers an average 7% increase for the next financial year.

Finance Minister Enoch Godongwana at the time warned that such a deal, which had not been fully budgeted for, would “require very significant trade offs in government spending.”

Labour leaders have not forgotten that the Treasury walked away from the last leg of a 2018 wage agreement, citing fiscal constraints.

“That is something that unions won’t agree to,” Parks said. “It is going to provoke a real strike.”

Cosatu, which is an alliance partner of the governing African National Congress, wants the government to fix state-owned entities instead. A reliable power supply — in a country currently experiencing 10 or more hours of power cuts a day — and an efficient rail network would allow companies to operate optimally and boost the nation’s revenue collection.

“If government goes this route of Treasury, it is in danger of getting itself voted out of power,” Parks cautioned. “It is difficult to motivate people if they feel you are busy pick-pocketing them and you not dealing with the fundamental crises.”