‘Cutting salaries and benefits will be met with hellfire’ – South African PSA trade union

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Civil servants on strike over pay in Western Cape earlier this year – they are now facing a 10 per cent wage cut

‘ANY TALK of cutting salaries and benefits will be met with hellfire,’ Tahir Maepa, deputy general manager of the 200,000-strong Public Servants Association of South Africa (PSA) trade union, said on Monday.

And Mugwena Maluleke, general secretary of the SA Democratic Teachers’ Union (DTU), added that pay cuts will ‘be met with workers’ might’.

They were responding to a proposal by African National Congress government National Treasury director-general, Dondo Mogajane last week, calling for all public sector workers to be forced to take a 10 per cent pay cut to pay for the recent R59 billion Eskom bailout.

Eskom (Electricity Supply Commission) is the South African electricity supply public utility.

Speaking on the sidelines of an event hosted by the SA Insurance Association in Johannesburg, Mogajane said: ‘The National Treasury’s box is empty. Growth is not coming through and tax revenues are not there. We are in trouble. The government needs to reduce spending.’

The R59 billion bailout for Eskom, announced by Finance Minister Tito Mboweni last week, comes on top of the R69 billion he unveiled during his budget speech in February.

This brings the total bailout granted to Eskom this year to R128 billion.

In his state of the nation address delivered last month, President Cyril Ramaphosa said Eskom would receive R230 billion from the government over the next 10 years, in tranches.

Only R26 billion was meant to be released in this fiscal year, with R33 billion following in the 2020/21 fiscal year.

But Eskom’s dire situation – coupled with the fact that it is central to South Africa’s economic functioning and cannot be allowed to collapse – has forced the state to hugely overshoot its financial support package.

This is despite Mboweni stating in his February budget speech that ‘pouring money directly into Eskom in its current form is like pouring water into a sieve.’

Mogajane said: ‘If we are going to be serious – without people losing their jobs – let us reduce the salaries and stop the bonuses.

‘Let us go back to labour and plead and renegotiate wages. One option I am considering is our taking a 10 per cent cut in our salaries.’

In response, the DTU’s Maluleke said: ‘Salaries are benefits and are subject to negotiations,’ adding that such a move would ‘be met with workers’ might’.

Maepa of the PSA, said that, while the union was willing to assist government to get out of ‘this self-inflicted tragedy’, it would not let workers ‘be the burden-bearers of wrong and reckless political and economic decisions.

‘Any talk of cutting salaries and benefits will be met with hellfire,’ he said. ‘What we should be doing is to arrest and recover lost revenue and hold those responsible for this accountable.’

Richard Mamabolo, spokesman for the Police and Prisons Civil Rights Union, said it would be wrong to make public servants the ones ‘who are penalised at the expense of those looters who fail to make state-owned enterprises functional, while getting huge bonuses at every turn.’

Mogajane said: ‘As a result of the R59 billion Eskom bailout, government debt is obviously going to increase. Our debt is going to go way beyond what it is now.

‘We should not be afraid to go to the Brics Bank (the New Development Bank), the African Development Bank and the World Bank and say: “Let us diversify our debt portfolio”.

‘We may be very limited on the tax option side because tax hikes will hurt the economy more.’

Economists are forecasting that the government’s budget deficit could climb from 4.5% to 6% or higher.

Fitch Ratings Agency last Friday moved its rating of the South African government from ‘stable’ to ‘negative’, which means it could downgrade the rating deeper into ‘junk’ status in future.

Moody’s said the bailout would ‘be credit negative for South Africa because it would be an additional drain on fiscal resources’.

Moody’s is the last credit rating agency to have South Africa on investment grade – S&P Global and Fitch rate the country at ‘junk’ status.

Meanwhile, the second round of wage negotiations between South Africa’s vehicle manufacturers and the National Union of Metalworkers of South Africa (Numsa) is scheduled to take place this week, with the parties still poles apart in their offers and demands.

Phakamile Hlubi-Majola, national spokesperson for Numsa, confirmed that the union is meeting with the Automobile Manufacturers Employers Organisation (Ameo) in Port Elisabeth from Monday until today in an attempt to thrash out a new three-year wage and conditions of service agreement for the industry.

Hlubi-Majola said the previous three-year agreement expired at the end of last month and Numsa has compromised from its initial demand in the current negotiations for a one-year agreement to a three-year agreement.

She said Ameo had also agreed that any agreement struck during these negotiations would be effective retrospectively from July 1st.

Numsa is demanding a 20 per cent wage increase in each year of the three-year agreement.

Hlubi-Majola said one of the most important demands being made by Numsa in these negotiations is for an industry-wide medical aid.

‘Currently, medical aid is negotiated at plant level. We want one medical aid which will cover the entire auto industry,’ she said.

Another important demand by Numsa is that all workers at level 4 must be moved to level 5 because there is a problem with workers spending many years on one level.

‘This is a sore point for our members who feel that it is unfair, especially as most of them have received the necessary training and work experience to be moved to the next level,’ Hlubi-Majola said, stressing: ‘This has a negative impact on their earning potential.’

Meanwhile, Public Protector Busisiwe Mkhwebane has fired off a new salvo at the Cyril Ramaphosa administration by launching an investigation into contracts Eskom signed with renewable independent power producers (IPPs) in April 2018.

The signing of the contracts had been blocked during the administration of Jacob Zuma and their finalisation was one of the first administrative actions taken by Ramaphosa and then energy minister Jeff Radebe after Zuma stepped down in February 2018.

Ramaphosa has made a point of voicing support for the IPP programme, which has brought more than R190 billion of investment into the energy sector over the past five years.

Mkhwebane’s investigation is based on a complaint laid by a group called the Anti-Poverty Forum run by Phapano Phasha who is associated with various lobby groups supporting former president Zuma.

At the heart of the complaint is Phasha’s contention that it did not make financial sense for Eskom to sign the contracts as they were onerous and caused Eskom to lose money.

On Thursday, Mkhwebane wrote to Eskom chair Jabu Mabuza requesting a comprehensive response to the allegations as well as a raft of documents relating to the transactions and all the individuals involved.

This must be provided to her within 14 days, she said, in order to write and finalise a report.

The tussle over the signing of contracts with IPPs has become highly politicised over the past few years as competing factions in the ANC campaign for various energy technologies, in particular nuclear energy, which was championed by Zuma.

Former Eskom executives, supported by pro-Zuma lobby groups and the National Union of Metalworkers of SA (Numsa), have campaigned against IPPs.

Under the agreements, Eskom is compelled to buy energy produced by the IPPs, whether or not it is needed to meet the needs of the grid.

Initial rounds of procurement from IPPs were expensive with the result that Eskom pays an average cost of R2.23/kWh for renewable energy.

In her letter to Mabuza, Mkhwebane, in referring to the complaint, states that Eskom receives only 89c/KWh for the energy it sells, ‘resulting in Eskom absorbing the deficit of 133c per KWh resulting in a loss estimated at R21 billion per annum’.