Cash gratuity stimulus package for public servants will cripple SA finances, DA warns

The DA has called on finance minister Tito Mboweni and public service minister Senzo Mchunu to explain the rationale behind a government decision to offer public servants a recurring cash gratuity of R978 after months of deadlocked wage negotiations.

The party also wants them to explain how the cash bonuses will be paid, given an already overstretched budget.

The decision will cost the state more than R15bn in additional expenditure, according to DA shadow finance minister Geordin Hill-Lewis.

This was a step backwards and capitulation to threats by the sector union, he charged.

His sentiments follow the state tabling a revised offer of a 1.5% one-off salary adjustment and the cash gratuity of R978 for 12 months at the Public Service Co-ordinating Bargaining Council (PSCBC) on Sunday evening.

Government offers 1.5% salary hike for public servants, plus cash gratuity
The government has tabled a revised offer of a 1.5% salary hike and a R978 cash gratuity for a year in a bid to end the stalemate in the public …

“What is this cash bonus for? While millions of South Africans have lost their jobs, and families are going through very difficult times financially, a monthly bonus for every public servant is simply not warranted at this time. Especially as the delivery of essential public services is at a low point,” said Hill-Lewis.

Labour unions have demanded a salary increase equal to consumer inflation plus four percentage points. They also demanded a risk allowance of 12% of the basic salary because of the Covid-19 pandemic.

They had threatened to embark on the “mother of all strikes” and possibly boycott local government elections later this year if the government did not shift from its initial offer of a 0% salary hike and a wage freeze for the next three years.

Hill-Lewis said the decision to succumb to pressure had been a step backwards for the country’s budget.

The government’s message to the country seems to be: ‘We have no money for the poor, but we can afford monthly cash bonuses for civil servants.’

DA shadow finance minister Geordin Hill-Lewis
“Assuming the 1.5% wage increase was already incorporated into Mboweni’s 2020/21 budget as a pay progression that employees qualify for based on their performance, this gratuity benefit will lead to total spending on public servant compensation to increase by more than 2%,” he said.

“The gratuity payment constitutes a massive step back in reining in the public wage bill and enforcing fiscal discipline as it would add at least R15.6bn in new expenditure to the already desperately overstretched budget.”

He also criticised the government for ending the R350 monthly social grant for the unemployed.

“The government’s message to the country seems to be: ‘We have no money for the poor, but we can afford monthly cash bonuses for civil servants.’”

The DA has since proposed an alternative budget to be undertaken as follows:

Freeze the wages of public servants not covered by the Occupation Specific Dispensation (OSD) (including head office managers and supervisors) over the three-year medium-term expenditure framework (MTEF) period. This would yield savings of R116.7bn.

Ensure the 66.3% of public servants covered by OSD receive inflation-linked increases over the MTEF period. To achieve this and stay within the deficit target, the government needs to mobilize an additional R9.55bn. This can be achieved by reducing the number of managers at non-OSD salary levels 11 to 16.

Reduce millionaire managers in the public service by 9,000, saving a further R29.4bn.
“This shows it is still possible to improve the pay of front-line public servants while achieving the needed cuts,” said Hill-Lewis.

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