DION GEORGE: Why is Cosatu defending the widening public sector wage gap?

SA’s growing debt burden is escalating into a humanitarian disaster as the cost of servicing our interest bill fast approaches R1bn a day.

The steep rise in interest charges has diverted vast amounts of resources away from schools, hospitals, the police and other vital public services meant for the most vulnerable. Frontline workers are as a consequence forced to do more with less.

The depth of the effect of the public debt burden on the wellbeing of South Africans becomes clear when we consider how quickly it has ballooned relative to tepid economic growth and revenue shortfalls. In 2008 SA’s debt-to-GDP ratio stabilised at a healthy 27%, which escalated to 74.1% in 2024. If all things remain equal, the Treasury estimates that debt will stabilise at 75% by next year.

However, research by the Wits Public Economy Project indicates that the Treasury is overly optimistic in its assessment of the outlook for the economy and forecasts that public debt will rise to 80% of GDP by 2025.

What must the government do to course correct and stabilise our fiscal situation? The largest share of the budget is now allocated to the public wage bill, largely to the benefit of high-ranking bureaucrats. There are nearly 38,000 public servants who earn more than one R1m annually, an increase of almost 300% since 2014.

Cosatu, SA’s largest trade union federation, has oddly never mentioned this disparity, even though these high earners have evidently not enhanced the quality of basic services and often obstruct progress. According to analysis by Codera Analytics, since 2000 real wages and unit labour costs in the public sector have increased more rapidly than labour productivity.

This is an obvious area where the government must concentrate its fiscal consolidation efforts. The introduction of the Responsible Spending Bill to parliament marked the first real attempt to address head-on the triad of uncontrollable spending, a top-heavy bureaucracy and an escalating debt crisis.

SA stands out for having implemented an expenditure rule without an accompanying debt rule. This has limited the Treasury’s ability to contain government spending in response to revenue shortfalls. The bill sought to introduce a debt rule to complement the existing expenditure framework.

It proposed a shift in fiscal policy aimed at enforcing discipline by setting sustainable limits on government debt accumulation and spending. If performance targets were not met within the fiscal year, the bill would have held those responsible for mismanaging public money accountable through targeted wage adjustments.

The Wits Public Economy Project report stressed the importance of protecting front-line services from expenditure cuts. Therefore, it is crucial to note that the bill would have protected civil servants who are covered by the occupation specific dispensation (OSD) Fund.  These are the dedicated nurses, teachers and police officers who serve tirelessly but disproportionately bear the brunt of the government-induced cost-of-living crisis.

During the discussions at the National Economic Development and Labour Council (Nedlac) before the bill being presented to the committee, a variety of stakeholders, including the Treasury, had the opportunity to comment. Organised labour failed to offer any input, yet later falsely claimed the bill had not been submitted to Nedlac for commentary.

The bill was subsequently introduced to parliament after feedback from stakeholders was carefully considered. Yet when it was deliberated in committee, Cosatu blatantly misrepresented it during its presentations, deliberately attempting to politicise the debate by framing it as an attack on front-line workers. Instead, Cosatu should have focused on the detrimental effect the debt burden has on the very people the federation claims to represent.

This issue raises a troubling question concerning the union federation’s intimate relationship with the ANC, which has gained infamy for appointing party loyalists to high-paying government positions. As if following a predetermined script, members of the ANC within the committee were swayed by Cosatu’s distorted portrayal of the bill. It was likely that they did not want to scupper their chances of securing lucrative posts in the executive after the national elections on May 29.

Throughout the process, the so-called champions of the working class have vocally referred to and criticised the unequal wage distribution in the private sector, yet are quite content to overlook the significant wage disparities between lower-level workers and their superiors in the public sector.

Regardless of the fact that most of their members occupy the lower salary brackets, the unions’ actions have continuously favoured high-earning managers at the expense of everyone else. This betrayal must serve as a crucial reminder to voters at the polls.

• Dr George is DA shadow finance minister.