Public sector jobs under attack

by Sep 21, 2021Amandla

Public sector jobs under attack

Dick Forslund | Amandla 77 | August/September 2021

A day or two before the Budget Speech in February 2020, the state employer met with the unions and announced that the third year of the 2018 public sector wage agreement wouldn’t be implemented. A “wage freeze” was proclaimed in the 2020 Budget Speech. The policy was again cemented in the three-year plan of the 2021 Budget Review. If the Constitutional Court declares that the state employer can walk away from a signed agreement, the so called “wage freeze” will last for four years. The Labour Appeal Court ruled that there is no money anywhere to pay for the increase, other than in the social grants budget. The unions’ appeal is due to be heard in the Constitutional Court on 23rd August.

The case in the Constitutional Court concerns two questions:

  1. Is the state as employer required to obey the Labour Relations Act?
  2. Can a Court support, and base its judgment on, one particular economic policy (austerity) and the ideology that underpins it (neoliberalism?

Parallel to this conflict, a one-year wage agreement for the public service was signed by the majority of unions in July this year. Nehawu and Popcru refused to sign. The agreement is for an increase of 1.5% percent across the board, plus a non-pensionable cash increase averaging about R1,360 per month depending on pay grade.

But didn’t this new one-year agreement break the Treasury’s “public sector wage freeze”? 

Not just wages…it’s about jobs

What has been called a “wage freeze” is in fact a freeze of the total labour cost in the public service. This cost doesn’t just depend on the level of wages. It also depends, of course, on the number of public sector workers employed – the head count. So, to calculate the “public sector wage bill” you must multiply the average cost for one worker by the number of employees.

This fact has been disregarded in the public debate. But it goes right to the heart of the main “structural reform” that the Treasury, under Tito Mboweni, has been pushing for. It is about “public-private partnerships”, outsourcing, procurement, tenders, privatisation. All ways of reducing the size of the public service sector as a share of the whole economy.

So the public sector unions were facing two problems in the negotiations. The first problem was how to defend the real wages of employees; how wages received every month cope with the inflation felt on the ground. This became an acute issue when the third year of the 2018 agreement wasn’t implemented. But the second problem was how to defend public sector employment as such. This is in the light of the Treasury’s plan to cut the wage bill by reducing the head count, not just by holding back on wage increases.

This second problem should indeed concern the unions. The work situation in public services is becoming more unbearable as vacant posts are not filled. It also concerns all prospective nurses and assistants, doctors, teachers and administrative staff who have finished their education but haven’t got employed because of the moratorium on filling vacant posts. In addition, speaking of public health, nurses and assistant nurses are not getting training as students during their practical placements. They are simply mobilised as part of the ordinary workforce in the understaffed hospitals.

And these job cuts are being enforced, even in the midst of the pandemic. The moratorium on filling vacant posts in public health has been spelled out in Provincial directives. A Circular from the Eastern Cape Department of Health issued on 2 December 2020 reads:

The approvals that have been made to fill all vacant posts, including posts where interviews have been conducted but the appointment letters have not yet been issued, posts that are to be advertised or have been advertised, are withdrawn with immediate effect.  

The Circular is called “Interventions to Curb Excess Expenditure on Compensation of Employees”. Already at the October 2018 Presidential Health Summit the number of vacant posts in Public Health was estimated at 37,000.

The drastic head count reduction plan

The total number of job cuts can be estimated by looking at what happens to the budget item “Compensation of Employees” over three years from 2021. For direct employees of national departments (excluding those employed by provinces), we can find specific details of job losses:

  • SAPS: “The number of personnel is expected to decrease from 181,344 in 2020/21 to 162,945 in 2023/24, due to natural attrition. Given the significant impact of the reductions on compensation of employees, non‐critical vacant posts will not be filled.”  This is a reduction of the police force by 18, 399 officers over two years or by 10 percent.
  • So called “Correctional Services”: “Contracts for non- essential personnel will be terminated and natural attrition will be allowed to take place, leading to a projected decrease in the number of personnel from 37,836 in 2021/22 to 36, 809 in 2023/24.” This is a reduction of 1,027.

Practically all national departments get job losses of between 3 and 10 percent over three years.

  • Home Affairs: 834 jobs (8.5%)
  • IPID (supposed to investigate police officers accused of crimes): 59 jobs (13%)
  • Statistics SA: 146 jobs (6%)
  • The Judiciary: 815 posts (4%)
  • SANDF: 352 jobs (0.5%)

As for the provinces, they can decide themselves how to cut “Compensation of Employees”, but they have to respect the ceiling in the national budget.

Total job loss

The total public sector wage bill was to be increased by only 2.11% this year, 0.86% in the second year and 0.5% in the third year. This year’s increase of 2.11% was exactly the same as last year. This reflected the planned wage freeze. The increase is because the state employer cannot avoid “pay progression” – a seniority system introduced 15 years ago by the employer to stop staff leaving for the private sector.

We have based our calculations on the three-year trajectory of 2.11%, 0.86% and 0.5% together with the average public service salary reported in the 2020 Mid Term Budget. This tells us that the 2021 Budget austerity plan will lead to a head count reduction (a job reduction) in all public services of about 60,000 over three years. 22,000 jobs under national departments will go, as we saw above. The other job losses will hit Basic Education and Public Health, where the vast majority of employees in Group 1-12 are employed by the provinces.

The 2021 consequences of the agreement

So we come to the 2021 wage agreement that Nehawu and Popcru for good reasons didn’t sign. What does it mean, given the 2.11% wage bill increase in the 2021 Budget?

The agreement stipulates a 1.5% wage increase this year for all employees in Group 1-12, whether or not they are entitled to pay progression . This is way below inflation. Basing our calculation on December 2019 labour data, this will add about R2.34 billion to the pay progression bill.

The other part of the agreement is a cash payment of between R1,220 and R1,695 (an average of R1,360) per month to Group 1-12 employees. The Treasury called this non-pensionable cash increase a “sweetener” and has costed it at R18 billion. Based on December 2019 data, that cost should be over R20 billion. Somehow the numbers have fallen! From this one can conclude that the exodus from public service has already started. The difference corresponds to about 5,000 less people being employed compared to 2019.

To the employees in Group 1-4, the cash increase means a wage increase of 15% and more. But the agreement is clear: this increase is not only “non-pensionable”. It is also temporary, for this year only. It will be treated as if it never happened as soon as the next wage agreement is signed after 31st March next year. And this in a year in which the plan is to increase labour costs in the public sector by only 0.8%, through a wage freeze and moratorium on filling vacant posts.

All in all, the public sector wage bill 2021/22 will increase by about 5.7% instead of the budgeted 2.11%, unless the head count reduction accelerates, with more people leaving public employment.

The new Finance Minister, Enoch Godongwana, has made clear that he supports the 2021 Budget plans, and this has impressed corporate economists. The unions that signed the agreement have kicked the can down the road. The crackdown on public sector employees next year is bound to be worse than this year and the reputations of the union negotiators have been tarnished.  

Union leaders are not informing their members, and the general public, what is really at stake. They are in effect refusing to take the austerity bull by the horns. The future of public services, as well as public sector unionism, is at stake. It is time to start breaking through this wall of misinformation and silence now.

Dick Forslund is an economist at Alternative Information and Development Centre (AIDC).

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