Friday Briefing: State’s plan to slash public sector wage bill sets up showdown with unions

Friday Briefing

State’s plan to slash public sector wage bill sets up showdown with unions

Finance Minister Tito Mboweni’s Budget speech in Parliament on Wednesday in which he announced significant cuts to the public sector wage bill, has riled the unions and will, in the longer term, test the relationship in the tripartite alliance.

Fin24’s Deputy Editor Jan Cronje looks at the unions’ responses and government’s previous attempts to cut this sector’s wage bail and how it flopped, writing how “the state’s efforts to bring down the public-sector wages by incentivising early retirement had largely failed”.

The announcement may have sat well with business, investors and ratings agencies, but lit a powder keg of union fury.

As Associate Professor Sean Gossel, Research Director at UCT’s Graduate School of Business points out: “It was clear that to avoid a downgrade, a significant policy shift was needed to signal that SA is serious about reforming our public finances and restarting inclusive growth – but a lot of these policies won’t be popular with the factions of government and its alliance partners”.

Columnist Mpumelelo Mkhabela says Mboweni and by extension, President Cyril Ramaphosa, does not have the same leeway that previous incumbents Trevor Manuel and Thabo Mbeki enjoyed, arguing that Mbeki had much more power in the ANC during his tenure than what Ramaphosa currently holds.

Either way, Mboweni is on a collision course with the unions.

Who will blink first?


Yunus Kemp

News24 Opinions Editor

What particularly angers Cosatu is that after a few informal ‘talks about talks’, they were met with one-two punch this week, writes Jan Cronje.

The circumstances of Mboweni’s speech are also different to the internal politics of the governing party. Mbeki had near-complete control of the party and he was often accused of centralising power, writes Mpumelelo Mkhabela.

With the economy on its knees, government’s latest Budget speech expects unionised labour to share the pain. If history is a guide, the plan is unlikely to yield the desired results, writes Sean Gossel.

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