The South African Federation of Trade Unions (SAFTU) notes with concern that the 2025 Budget, while offering a modest real increase of 0.8% in non-interest government expenditure, fails to reverse the deep austerity cuts imposed over the past decade.
Our analysis of real (inflation-adjusted) expenditure trends from 2008 to 2025 shows that this year’s increase, although positive, follows more than ten years of real cuts or stagnation. Since 2016, the public sector has endured repeated years of negative or near-zero growth in spending, particularly in frontline services such as health, education, social grants and policing.
The new budget confirms that as a share of all spending, the ‘social wage’ continues to be cut. Once the austerity regime began in earnest in 2021, that share has fallen from 51.6% to what by 2027 will be just 50.6%.
A cumulative index of real expenditure, using 2008 as a baseline, reveals that government spending power today remains lower than it was 15 years ago. This includes periods where real spending shrank year after year, undermining service delivery, job creation, and economic stimulus.
The 2025 Budget does not mark a break from this pattern. On the contrary, it reflects a managed continuation of austerity — with debt service costs reaching R1.2 billion per day, absorbing more resources than any single social programme. The reason for this is that South Africa’s interest rate regime – both for local and foreign borrowing – is one of the world’s most punishing, as a result of Reserve Bank ‘monetarist’ ideology (keeping the base rate high so as to lower buying power and thus keep inflation down) and its liberalisation of capital controls and failure to halt Illicit Financial Flows, which Treasury has admitted allows up to 7% of GDP to flee the country – in turn, requiring higher interest rates to attract it back.
So while the monetary stance is exceedingly liberal – to the point South Africa has been hit with a Financial Action Task Force ‘gray listing’ that reflects weak regulation and prosecution of illicit flows – the fiscal stance remains centred on achieving a primary surplus, not on meeting urgent developmental needs or fulfilling constitutional obligations to provide quality public services to all. This is the worst of all worlds, one that pleases only the rich and bankers.
Raising new funds would have been easy, by raising the tax paid by big corporations – whose rates have fallen from 52.5% in 1992 to 27% today, without having the desired result of raising private fixed capital investment – and tightening exchange controls to prevent capital flight. The decision to instead raise the fuel levy without the requisite improvement in cheap or ideally free public transport, means that the spatial legacy of apartheid lives on. Poor and working-class people living long distances from economic opportunities because of white racist municipal planning, will pay more to make trips to and from work and markets.
Specific areas we had hoped for relief to working-class budgets included a higher level of Value Added Tax exemptions, because these were mooted in the March budget. But a zero rating on protein sources from basic meats to beans to dairy goods that were promised two months ago, are now missing. So are above-inflation adjustments to social grants, which have stagnated at an extremely low level in comparison to the needs of the majority.
We reject the notion that a 0.8% real spending increase — barely keeping up with inflation and lower than the population growth rate — can repair the massive damage done by years of budget cuts. It is not enough new spending to fill the tens of thousands of vacant public sector posts, rescue collapsing municipalities, or ensure universal access to quality health and education.
At a time our entire society is complaining about various features of state failure – and in a week with protests disrupting main roads in Johannesburg and Cape Town – it is as foolhardy to make budget cuts, as it was in May 2021 when Treasury’s ending of the Social Relief of the Distress grant (for three months) had catastrophic consequences and had to be reversed.
This country remains the world’s most unequal, and poverty levels measured properly (at R65/day and below) suggest about two-thirds of the society are below the basic survival line. Without stimulating this part of the society and their economy with greater spending, our country will become more and more unliveable.
SAFTU therefore reaffirms its call for:
• A decisive end to austerity and the neoliberal fiscal framework;
• A massive public investment plan funded through wealth taxes, prescribed assets, and an end to illicit financial outflows;
• The full absorption of community healthcare and social service workers;
• Expansion, not rationing, of essential public services.
The working class cannot be made to pay for a crisis it did not create. We demand a bold, redistributive budget that puts people before profits and restores the public sector’s capacity to lead real economic transformation.
Issued by the South African Federation of Trade Unions (SAFTU)
21 May 2025
A Statement was issued on behalf of SAFTU by General Secretary Zwelinzima Vavi.
For more details, contact the National Spokesperson at:
Newton Masuku
066 168 2157
Newtonm@saftu.org.za
