The South African Federation of Trade Unions (SAFTU) opposes neoliberal solutions to the socio-economic crisis of capitalism, as these, unfortunately, worsen the plight of the working class. The Minister of Finance, Enoch Godongwana, should not implement an austerity budget that was tabled in the Medium Term Budget Policy Statement (MTBPS).

Unfortunately, the record of the last few years, the already announced MTBPS and the pressure of the International Monetary Fund (IMF), World Bank, and rating agencies point to one direction: that we will see even more austerity programmes.

In the Country Partnership Framework with South Africa, the World Bank expects “structural reforms” and “fiscal consolidation” as the key elements to drive economic growth. The IMF recommended “fiscal consolidation to reduce public debt” through containing the “public sector compensation” and “rationalizing transfers to SOE” amongst others.

Fiscal consolidation (government containing budget growth by imposing cuts) and structural reforms are enacted as part of attempts to create an “enabling environment” for private capital not only because they are expected and recommended by IMF, WB and rating agencies, but also as a statement of commitment to neoliberalism on the part of the ANC.

In the MTBPS of 2022, which is premised on this fiscal consolidation, the following are some of the proposed budget cuts from 2022/23 to 2023/24:

  • Health: will decline by R2,3 billion
  • SAPS: will decline by R400 million
  • Home affairs: will decline by R600 million
  • Law and courts: will decline by 300 million.
  • Public Sector Wage Bill: Besides the R20,5 million cash gratuity, the government is still gearing to cut R303 billion from the public sector wage bill between 2021/2022 and 2024/2025. Treasury said that “additional fiscal measures or reductions in headcounts would be required to contain overall compensation spending.”

The consequences of these cuts are:

  • Substantial reduction of jobs in various departments.
  • Lack of infrastructure.
  • Less maintenance and repair.
  • Shortages of working equipment.

The graphic and concrete effects of these cuts are:

  • No progress has been made in filling vacant posts. More posts are being frozen. This freeze of posts gives effect to the plan by the treasury to reduce headcounts to consolidate the compensation bill in the public sector. 

This is why nursing graduates and social workers who studied through the government bursary are not being absorbed into public Health and social development as usual. 

The reduction in staff, worsened by unfilled vacancies, has produced worst ratios compared to international standards. Educator-to-learner ratio is 1:37; Nurse-to-patient ratio is 1:250; the police-to-population ratio has worsened, from 1:370 to 1:450

  • Having received reduced allocations, all departments have reduced budgets meant for machinery and equipment. This perpetuates the shortage of equipment in public institutions.

In the 2022 Budget Review, economic development planned to cut its investment in equipment and machinery nominally by -6,8% (-11,6 decline in real terms), Health by -5,6% (-10,4% decline in real terms), Learning and Teaching Support Material (LTSM) in basic education by -2,5% in real terms, peace and security by -1,3% (-6,1% decline in real terms).

  • Public institutions face decaying and lack of infrastructure. Schools do not have enough classrooms and office spaces, hospitals do not have enough patient wards, prisons are overpopulated and cram many inmates in small spaces, etc. 

School infrastructure backlog grant, much-needed funding to ensure school libraries, maths and natural science laboratories and more classrooms are built, will be cut by a nominal -3,7% (8,5% in real terms). 

  • State Owned Enterprises are also on the receiving end of budget cuts. SA Post Office in particular, was not even mentioned in the Medium-Term Budget in 2022. The government has not committed to helping it despite that it requires more than R8 billion to be recapitalized, according to its CEO. 

Meanwhile, SA Post Office is carrying out its restructuring in the most brutal manner – attacking jobs and wages simultaneously. It is carrying out up to 40% of wage cuts for the 12 months, and as if that was not enough, it filed a section 189 for retrenchment at the CCMA to retrench 6000 workers. Workers and the public will recall that SA Post Office has defaulted on paying over money it deducts for workers’ medical aid, provident fund, and UIF, to the respective holders. 

Though there are some capitalisation allocations to Denel, we must reemphasize here our perspective that “the country should not allow the military industrial complex to develop outside of public ownership.” Our SONA statement emphasized that once “we allow private firms to control the production of weapons at large scale, wars will start springing across Southern Africa, as those arms cartels seek to create a market for consumption of their weapons and thereby, make profits.”

To resist this onslaught, SAFTU has adopted a mass campaigning programme at its 2nd National congress. SAFTU will, with mass action, continue fighting against budget cuts, wage cuts, job losses and unemployment. The demands below captures our expectations for the Budget tomorrow (23 Feb 2023):

  • Overhaul the economy to base it on the need to address unemployment, poverty, and inequality;
  • Reverse the budget cuts, and increase spending in critical areas of service delivery;
  • Ensure public sector wages are budgeted sufficiently so that more teachers, nurses, police, correctional officers, social workers and traffic officers are hired;
  • Implement the 10% wage increase for public service workers. We reject the 3% that the government unilaterally implemented – which undermines collective bargaining and is inconsiderate of the rising cost of living;
  • Invest in infrastructure and equipment for public institutions, particularly hospitals, schools, police stations and local government;
  • Introduce a monthly basic income grant of R1,500;
  • Introduce a job guarantee scheme so the 12.5 million workers can get jobs;
  • Reverse privatization, and stop any plans to privatize publicly owned goods;
  • Nationalization of the big corporates, big farms, mines, and banks;
  • End corruption in the private and government sector;
  • Introduce the wealth or solidarity tax so that the rich pay more tax;
  • Increase the corporate tax, stop illicit financial outflows and tax dodging schemes;
  • Stop government officials and business from looting up to 40% of the procurement budget;
  • Do not increase the VAT, as it will hit the poor more than the rich;
  • SA Post Office be allocated more funds to capitalize it;
  • Reinvest in the transport system in which the railway system is refurbished, and trains brought back to fare people between towns and from workplaces to residential areas;
  • A public works programme on decent wage;
  • End corruption in government and the private sector;
  • Introduce a wealth or solidarity tax so that the rich pay more tax. Increase the corporate taxes, stop the business from looting up to 40% of the procurement budget, stem illicit cash outflows and tax dodging schemes;
  • Please do not increase the VAT as it will hit the poor more than the rich.
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