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Government cannot walk away from wage deal scot-free, court hears

Public sector unions want 2018 wage agreement enforced.
The court heard of Treasury’s own findings that the agreement could be enforced if at least 5% of the public service sector is retrenched. Image: Moneyweb

Although South Africa’s fiscal position has gradually weakened over the past three years, the government cannot walk away from implementing the final year of a three-year wage deal, legal counsel for public sector unions argued on Wednesday.

Unions – including the Public Servants Association (PSA), the SA Democratic Teachers’ Union, the National Professional Teachers’ Organisation of SA, the Health and Other Services Personnel Trade Union of SA, and the National Education, Health and Allied Workers’ Union (Nehawu) – approached the Labour Appeal Court to compel the government to stick to its end of the 2018 wage agreements.

Read: Unions reject government’s request to postpone wage bill court battle

Despite this being the final year of the three-year deal, the government unilaterally decided to announce a freeze on public sector wage increases earlier this year in line with its bid to save R160 billion over the next three years.

Agreement ‘unenforceable’

Advocate Jeremy Gauntlett , appearing on behalf of Finance Minister Tito Mboweni, argued that the wage agreement is invalid and unenforceable given that the public finances have vastly changed since the agreement was signed, due in part to the Covid-19 pandemic.

The R37.8 billion required to finance the wage increases, Mboweni says in court papers, comes at a time when the “rest of the country’s workforce (including higher-echelon public servants, Cabinet and Parliament) have accepted salary cuts or freezes as a consequence of the economic climate and Covid-19 crisis”.

Gauntlett told judges Dennis Davis, Phillip Coppin and Violet Phatshoane that National Treasury’s hands are “empty” and that enforcing clause 3.3 of the wage agreement, which details percentages of salary increases from 2018, takes 60% of the country’s revenue and allocates it to just 2% of the population.

However, Advocate William Mokhare who appeared on behalf of Nehawu said that as recently as April, the government had indicated commitment to unions that it would comply with the wage agreement, despite the government experiencing “difficulties” with the implementation. Additionally, Mokhare said the decision to sign the 2018 agreement with unions was approved by the cabinet so it should be enforced.

Obligations

“Courts should encourage the state to respect its obligations … the moment the government is allowed to go scot-free on an agreement that it signed willingly … [it would allow] any other corporation that has been implicated by Covid-19 to walk away,” Mokhare said.

Mokhare argued that a better option than a dismissal of the wage agreement would be for the government to be assisted in finding a solution that would enable it to comply with its obligations despite the ailing public purse.

Judge Davis pointed out that the country’s finances had deteriorated since the agreement was signed and that should it be enforced, government’s funds could need to be reprioritised from critical programmes to finance the agreements.

‘Equitable remedy’

In response, Advocate Ngwako Maenetje who appeared on behalf of three unions, said in the face of the impossibility of the enforcement of the agreement the government cannot walk away. Rather the agreement remains valid and the parties are eligible to a “just and equitable” remedy.

Advocate Chris Orr, representing the PSA, cited Treasury’s own findings that the agreement can be enforced but would require that at least 5% of the public service be retrenched.

While this suggestion may not find favour among public servants, Orr argued that the government’s assertion that it would be impossible for it to implement the wage deal (given the strained finances) falls away.

Judgment has been reserved.

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It will be more stealing from the poor to cover the unsustainable wage bill, caused as a result of ANC patronage politics.

The Govt needs to retrieve the stolen money by ANC cadres.

What a freaking joke.

Get the popcorn, sit back and enjoy the show.

You are paying for it in any case.

The unions are equally guilty. Even the most dim-witted trade unionist must realize that his public alleged servant members are grossly overpaid, and that any increase would be a grotesque insult to the suffering private sector.

The case of Socialism meet thy maker !!!

Socialism is economic ignorance. This situation before the court proves the ignorance of both parties. The parties are members of the Tripartite Alliance. They have been in control of government policy for 25 years now. The government has been going deeper into debt over this time. Who owns the debt? Who lends to the government?

Who funds the public sector wage bill? The PIC is the largest owner of government debt, the largest lender to government, the funder of the public sector wage bill.

Who is the PIC? The PIC manages the pension savings of public sector workers. In effect, the members of the Tripartite Alliance are funding the shortfall between tax generation and government expenditure. They are funding their own salaries out of their pension funds.

The public sector workers are asking the court to force the government (Tripartite Alliance, themselves in other words) to plunder their pension savings to pay their wage increases.

If you agree that this case is absurd, then you are not a Cosatu member. This case is an elaborate IQ test, and it does not look good for Cosatu.

One of the Major benefits of R6,200 a month / R1,550 UBI is a competitive labour environment.

The employee would not work for a wage that they seem unfair whilst an employer would not have to pay an employee more than what they deem is a fair wage for the work.

Businesses have created industrial machines and supply chains which are outpacing the human involvement the production process.

On one hand this is the reason for cheaper products whilst on the other only those who have a high qualification and strong work ethic are employed.

On the other hand it’s is also the reason for less labour being required and lower wages for labour due to the over supply.

Globally 85% of people dislike their jobs and given the opportunity to peruse something which is meaningful they would. The main reason for this is the financial insecurity of leaving their current jobs.

SA is ranked at position number 6 on the Missery Index people and one of the most politicalised societies on the planet.

Employers should have every right to discriminate which resources they require including labour for their production needs and at the same time Employees should have the right to peruse happiness and enjoyed freedom and civil rights.

Employees should have the right….? But they have! Just resign & move on to other, greener pastures?

Firstly, the idea that a 9 to 5 job is a stepping stone to a middle income lifestyle has all but eroded with the gig economy becoming the new normal paying job.

Unfortunately the benefits like healthcare, pension and a stable monthly income the do not exist.

Secondly people will not resign for the fact that they do not have the financial means to do so.

People are heavily indebted, public servants are allows to attain huge amounts of debt purely because they have a fixed guaranteed monthly income.

The increase in wages which they are asking for is merely to try assist in covering the debt upkeep costs, I saw this first hand the day after the new salary reflects into their back accounts go watch the queues at banks and credit furniture stores, people stand their with their ID books and new pay slips.

You live in a dream world.The reason why public sector employees never resign is 1. They are entitled and do not have to work at all and there is no accountability. They are lazy.2.They are grossly overpaid. 3. They abuse the leave and perks something terrible. 4. They are incompetent and unemployable in the private sector.

@luluAlert. Spot on. I had the look at the SABC remuneration figures published by Fariel Hafejee ; its frightening. Less that 1:1 ratio between supervisors and managers vs workers. Lots of chiefs. The annual remuneration of a supervisor is around R900,000. Insane.

At this level, making promises and/or offering guarantees that one cannot keep is a sign of incompetence, or more euphemistically inexperience. If there was any uncertainty about a future commitment it should have been subject to certain conditions (example subject to affordability). How else does one maintain credibility? The SA economy was in dire straits before the coronavirus reached our shores, so using COVID-19 (even in a limited sense) as an excuse to evade liability doesn’t sound very convincing. If the SA government was a well run private-sector business there would have been some serious restructuring “for operational reasons” on the cards long ago – starting at the top.

1) The collectivism mindset of this government is astounding. So the court must now be the middleman between people and state? Can’t the leaders not simply do what they were elected to do? Looks like the electorate must simply, in elections, vote for the courts – then there’s nou quarrels. 2) who will be retrenched when government are faced with the inevitable? Those who are worth their salt or those which are not cadres en comrades? 3) Far to little focus on economic and growth policies. Try as they might, the ANC is unable to be a symbiotic being but rather a form of cancer.

All this proves the inability of the ANC to govern.

I’m sure a 10 year old can work out that there is no money, and if anything, the public service should be cut by 30%, and those left, should take a 30% drop in their pay. (will still be earning more than in the private sector).
Anyone for a banana ?

As much as I dislike the unions, I find myself agreeing with them. The deal is done, so the way forward should be to honour it, or at least to try to re-negotiate the terms. It should not be acceptable to unilaterally renege on a contractual agreement as it sets a bad precedent for the whole country. That being said, the days of acceding to union demands should be over. Fire your incompetent government negotiators, and set an absolute freeze to any further increases or hiring until the private sector wages have caught up and government employee numbers have naturally declined.

I agree. Why must the workers suffer for the corruption of the ANC government? Think of the chaos that will ensue if these peoples salaries can’t keep up with inflation…..on the other hand they voted these scum into power!

Ahem, these aren’t “workers”. They are generally idlers, loafers and layabouts; rude, corrupt and incompetent; worse up the ranks. Their only reason most are employed is because they are either friends and family of our ANC regimes elites or they support the ANC. Little else.

And so the moment of truth arrived when Dorothy & Co,(The labour Unions), discovered the Wizard of Oz, (the ANC), was a fake as their rose-tinted glasses fell to the floor and broke! Shame.

I am enjoying this. The gavamunt do not want to keep their side of the agreement. The same lot decide the minimum wage every year.( Will they look at the impact of Covid for next years increase?) As an employer I have no say, I must just pay.

End of comments.

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