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The Minister of Finance, Tito Mboweni. (Photo: Leila Dougan)
The Labor Appeal Court has ruled that the last tranche of the 2018 wage settlement, which proposes wage increases to reduce inflation for 1.2 million public servants, is illegal and contradicts the Constitution.
The controversial decision of Finance Minister Tito Mboweni not to grant salary increases that exceed inflation to civil servants in 2020, under the last tranche of the 2018 salary agreement, has been upheld by the Labor Appeal Court.
The Johannesburg court has ruled that the application of the salary agreement is illegal and contradicts articles 213 and 215 of the Constitution because the government can no longer pay salary increases to 1.2 million civil servants.
This is a huge victory for Mboweni, who wants to implement salary freezes for public servants for the next three years to cut government spending by R300 billion and control growing state debt. The payroll of public servants is out of control; it skyrocketed from R154 billion in 2006 to R639 billion in 2020, becoming the largest component of public spending. In the effort to freeze wages, Mboweni has the support of the Minister of Administration and Public Service, Senzo Mchunu.
The court’s ruling has strengthened the government’s powers and discretion to enter into collective agreements or to breach them when it can no longer afford it. It will also give Mboweni and Mchunu the upper hand in their upcoming negotiations with the unions that represent public servants on salary increases for the next few years. These negotiations are expected to begin in January 2021.
The court sympathized with the government’s argument that it cannot afford to implement salary increases in 2020 for civil servants, which would cost the Treasury an additional R37.8 billion at a time when public finances are deteriorating due to the pandemic in Covid-19.
“In current financial circumstances, it does not appear to be fair and equitable to order the government to spend significant and scarce financial resources on employees whose jobs are already secured and salaries have been paid in full, particularly in circumstances where there is an imperative of Recovery. of the economy for the benefit of millions of vulnerable people.
“For example, the granting of social grants to South Africans living on the margins could be threatened by such a decision [to enforce wage agreement], as well as the need to pay additional important and critical medical costs caused by the pandemic ”, wrote three judges of the Labor Court of Appeals in their sentence.
Start of salvo
In February, Mboweni placed the cat among the doves with his announcement of the revision of the three-year wage agreement, which was signed by the government and unions representing public servants in 2018. 2020 is the last leg of the wage agreement. , which the government refused to implement.
Unions, including the Civil Servants Association, the Democratic Union of Teachers of South Africa, the National Organization of Professional Teachers of South Africa and the Union of Health and Other Services Personnel of South Africa, dragged Mboweni and Mchunu to the Labor Appeal Court for enforce the last leg of the wage agreement.
Depending on your pay scale, the pay agreement proposes salary increases of between 4.4% and 5.4% for public servants from April 2020. The government pays an extra R37.8 billion to implement the salary agreement “It cannot be considered in itself as a fair and equitable remedy within the economic and social context in which it is [wage] The dispute is located, ”said the court, which rejected the unions’ request.
Mugwena Maluleke, the chief negotiator for most of Cosatu’s affiliated unions, said the unions had studied the court ruling and were considering their next move.
“We are very disappointed with the ruling. We are waiting for our legal advisor to decide whether to take the matter to the Constitutional Court. The implications of the ruling are huge for collective bargaining, which is an economic tool that must be respected because it balances power between the employer and the employees, ”Maluleke said. Business maverick.
One of the central arguments made by Mboweni in court was that the salary agreement should be declared illegal because the government is no longer bound by it in terms of articles 78 and 79 of the Public Services Law. This law requires the government to enter into collective agreements only if it can afford it. The unions did not buy this, saying that the wage agreement is similar to a contract, which is binding on the government.
But the Labor Appeal Court supported Mboweni’s argument, saying that the government had proven as early as 2018, when Malusi Gigaba was the finance minister, that the wage deal was unaffordable. At that time, Gigaba said no additional funds were available to finance the salary agreement and He proposed that 19,000 civil servants retire to free up R12 billion in additional resources. But Gigaba and the rest of the cabinet gave in to union demands for wage increases. DM / BM
