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South Africa cannot implement a salary agreement with public servants because it would precipitate a fiscal crisis, Finance Minister Tito Mboweni said.
The government and unions will face off in the Labor Appeals Court on December 2 over Mboweni’s proposal to freeze wages that have risen 51% since 2008.
Last week, Fitch Ratings and Moody’s Investors Service downgraded South Africa’s debt assessments to garbage, saying the state could struggle to meet its plan to control spending.
“What the government and the South African economy cannot afford now, and what is not fair and equitable under the current circumstances, is for civil servants to demand even more wage increases that exceed inflation and outperform the private sector on a base already high, “Mboweni said. in court documents.
South Africa’s government reneged on a three-year wage deal earlier this year and Mboweni said last month that it will freeze wages for the next three years.
The government and unions typically negotiate the page for three years in a row and the current agreement will end in March 2021.
The South African Congress of Trade Unions, the country’s largest workers’ federation, has warned that the dispute over wages could lead to the breaking of its alliance with the ruling African National Congress.
Mboweni said that Zambia’s financial troubles provided a warning and South Africa cannot afford to go the same way.
This month, Zambia defaulted on its Eurobonds, the first African nation to do so since the start of the coronavirus pandemic.
The South African government would be forced to borrow more than R78 billion ($ 5.1 billion) if the court backs the unions in their fight to get the pay deal implemented, said Minister of Administration and Public Service Senzo Mchunu, in court documents.
Read: This is where every R100 of public spending in South Africa goes
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