PUBLIC SECTOR WAGE AGREEMENT | Majority of Union Leaders Capitulate to ANC Austerity

Trade union leaders with a majority in the Public Service Co-ordinating Bargaining Council (PSCBC) have agreed to sign a wage agreement with the ANC-government on behalf of South Africa’s 1.2 million public sector workers.

All of Fedusa’s public sector affiliates (including Hospersa, Naptosa and the PSA) have agreed to sign. Cosatu is divided. Teachers’ union Sadtu and nursing union Denosa have agreed to sign but Nehawu and police union Popcru have refused. Saftu’s public sector affiliates have also refused to sign. This gives the pro-agreement leaders a 60% majority allowing it to be imposed on all unions whether they sign or not. The possibility of a legal public sector strike has therefore receded for now.

The trade union leaders willing to sign have ultimately capitulated to the ANC-government’s demand that the working class shoulders the burden for the crisis of SA’s capitalist economy. The largely cosmetic shifts in the government’s negotiating stance were simply intended to help cover-up the extent of the capitulation.

This was the second act in what will be a four-part assault on public sector pay by the ANC-government, set in motion by the downgrading of the country to “junk status” by the international ratings agency companies. The first act saw the unilateral cancellation of the final-leg of the 2018 wage agreement (the third act will be the 2022/23 wage negotiations and the fourth those of 2023/24).

The trade union leaders refused to organise a struggle over this first assault too. Instead, suffering a serious bout of constitutional cretinism, they have relied solely on the courts. They have failed to fully grasp the implications of the Labour Appeal Court ruling which declared the 2018 agreement not only illegal but unconstitutional (see here). An extremely dangerous legal precedent is being set that undermines the very notion of collective bargaining.  On 24 August the Constitutional Court will hear a final appeal. However, following this latest capitulation it is even more likely that another ruling in favour of the government will be handed down. As we have pointed out before, class battles are ultimately settled in the streets rather than in the courts.

Balance Sheet

The trade unions’ original wage demand was for “CPI + 4%”, i.e. around 9%. The pro-agreement leaders are settling for a monthly R1,000 “non-pensionable cash allowance” (payable until an agreement for the 2022/23 financial year is reached) and a 1.5% pensionable pay increase. Both components will be back-dated to 1 April. The ANC-government twice revised its opening 0% ‘offer’ to arrive at the agreement. Naptosa’s Basil Manuel, in justification of signing the agreement, said “we must acknowledge the big difference between zero per cent and where we have ended up”. Is this accurate? How “big” is this difference? Is there any element of a victory, even of a partial character, in this agreement?

Firstly, 1.5% is only 17% of the way from 0% to 9%. Viewed in that way the wage agreement is decisively more in the government’s favour. Secondly, any pay ‘rise’ below CPI (4.9% in June) amounts to a pay cut in practise. However, the bosses’ newspaper Business Day has attempted to prove that once the “cash allowance” is factored in no worker is facing a below inflation ‘rise’.[1] They argue that the lowest-paid Grade 1 workers will receive a de facto 11,7% increase, 6,3% for Grade 6 and 4,2% (the projected final CPI for 2021) for Grade 10. However, these calculations ignore crucial factors.

The poorest in society spend most of their income on essentials – food, fuel, clothing, public transport etc. These items face an inflation rate higher than the CPI which is an average. In June, for example, fuel prices had risen 27,5%, over the previous year, passed on to low-paid workers through, for example, taxi fare hikes. Food and non-alcoholic beverage prices have increased 6,7% in the last year – cooking oil is up 21,6%! Electricity tariffs have been increased 15%. The real inflation rate in the pockets of the lowest paid public sector workers could easily be higher than the 11,7% pay rise that Business Day has calculated.[2]

Business Day also fails to mention that public sector workers’ pay has been frozen since 1 April 2020 because of the cancelled final-leg of the 2018 deal. Despite the lockdowns’ dampening effects on the economy, CPI still rose 3.3% last year (food and non-alcoholic beverage prices were up 6%).[3] In addition, the massive increase in unemployment means many public sector workers are supporting additional family members who have lost jobs. We are certain that the new wage agreement in no way feels like a victory for the vast majority of public sector workers.

However, the full measure of the capitulation is revealed when the wage agreement is considered against the background of the ANC-government’s overall fiscal policy. The 2020 budget outlined government’s plan to reduce public sector pay by R303 billion over the next three years. This is to guarantee debt interest payments to the capitalist class and avoid a sovereign-debt crisis. The new agreement does not restore one cent of the R160 billion target for the first tranche of this cut.

The 1.5% increase re-dresses the already-budgeted-for annual “notch increase” which most workers would have received regardless of the wage agreement. Likewise, the cash allowance, amounting to R18 billion, will be funded through “the pooling of existing benefits for workers”, i.e. re-jigging funds that have also already been set-aside for workers’ remuneration packages. Finance Minister Tito Mboweni has assured the capitalist class that it will be “fiscally neutral”.[4] Even if Mboweni fails in this, and the R18 billion does come at an additional cost to the Treasury, the government has still achieved 89% of its R160 billion pay-reduction target.

Objectively therefore, there is nothing to celebrate in the wage agreement. However, for Marxists, this does not exhaust an assessment. The balance of class forces and the possibilities that existed in the situation are also key. In other words, were public sector workers willing to fight, i.e. strike? And if they had, could they have won an improved offer? We are confident that the answer is YES! And YES!

Even if workers had not won the full 9% demand at least they would have felt the power of their unity in action steeling them for the battles that lie ahead. In turn this would have lifted the confidence of workers in local government, the SOEs and the private sector. The bosses here are not only taking their cue from the government’s hardegat attitude. They have also evaluated the response of the union leaderships, emboldening them to take a similar hardline approach in their own sectors.

The deadlocks in the local government and engineering wage negotiations show that the general strike raised by some trade union leaders as an abstract threat, could have been organised through the coordination of disputes. A public sector general strike could thus have been the foundation on which to mount a counter-offensive against the government’s generalised onslaught, not only on employed workers, both organised and unorganised, but on the working class as a whole, employed and unemployed, through savage cuts in social spending. It is the continuing crisis of leadership in the trade unions which was decisive that the possibilities for making greater gains were not realised.

Pressure

The pressure from the ruling class has been intense – a relentless propaganda campaign in the capitalist media, ANC divide-and-rule games threatening that any pay increase for public sector workers will take money away from services for the poor and the ratings-agency companies, prophesising economic Armageddon if public sector pay is not “reigned-in”.

This pressure flows from the seriousness of SA capitalism’s economic crisis which the trade union leaders across the board appear not to appreciate the depth of. The relentlessness of the capitalist class against yielding to the public sector unions’ demands flows from their determination to further shift the balance of power between the classes in favour of capital. The government’s rejection of proposals, for example, to fund the salary increases through a pension payment holiday, which would have had no impact on government finances, shows that this was no mere exercise in fiscal book keeping. They want to break the power of the unions as a whole to make the working class pay for the worst crisis of capitalism since the 1930s. It is not for nothing that Ramaphosa came to power armed with amendments to the Labour Relations Act to try and cripple the right to strike, emasculate picketing and arrogated the government the right to declare a strike illegal if it is considered damaging to the economy – the very basis for the hard-line stance in the wage negotiations. Weakness invites aggression.

The capitalist class is generally satisfied with the government’s victory. Business Day, this time in an editorial, calls the deal “something of a victory for [Finance Minister] Mboweni” and is optimistic that “the days of capitulating to union demands … are gone”. But even this “settlement” is unaffordable going forward. As far as they are concerned the war is far from over. Commenting in the Sunday Times, Hillary Joffe warns,

…the real risk to the fiscal framework are beyond this year. First because the public sector wage settlement is just for one year. There’s no guarantee that the temporary “gratuity” which gives public servants at the lower end of the scale increases of well above inflation, won’t become a permanent part of the wage bill – as it could if there is no agreement on a fresh deal for next year.

Sunday Times, 1 August 2021

Crisis of Programme

The trade union leaderships failed to adequately answer the propaganda of the ruling class. Unfortunately, this applies across the federations, including to Saftu. This will have had an effect on workers. The propaganda of the ruling class is not pure fantasy. The question of public sector pay, and public sector spending in general, is inseparable from the rapidly growing government debt. This poses the danger of a sovereign-debt crisis with all the disastrous economic consequences this would entail for the working class. This danger is in turn inseparable from SA’s stagnant capitalist economy, which is itself bound-up with SA capitalism’s neo-colonial position in the world economy. Every thinking worker recognises that A, leads to B, leads to C. There is no solution to SA’s over-lapping crises on the basis of capitalism except the stop-gap which the ruling class is pursuing – attacking the living standards of the working class. In the long-run this cannot solve SA capitalism’s problems however. It simply sows the seeds for new crises.

Only a socialist programme can show the way out. This would start with the call for the nationalisation of the banks, to whom 70% of government debt is owed, and a refusal to pay the remaining 30% owed to international capitalist speculators. Only a workers’ government would be willing to pursue such a radical programme. But a workers’ government cannot be lifted into power without a workers’ party.

But nowhere have trade union leaders’ taken their arguments outside of the framework of capitalism. It is taken for granted that this capitalist government’s debt must be re-paid. We need to be clear that Saftu’s repeated calls for a fiscal stimulus is a capitalist policy. As in the application of CPR to resuscitate a patient who has had a heart attack it is an argument for saving capitalism by preventing a revolt of the working class.

The need to form a workers’ party and open up a political front in the public sector pay struggle has also been completely missing. The Cosatu leadership does not advance beyond vague threats to “withhold support” from the ANC in the next elections. The Saftu leadership continue to refuse to discuss the idea of a workers’ party in public, despite years’ old resolutions committing the federation to help bring one into existence.

The PSA’s statement announcing its intention to sign the wage agreement confirms the dire need for the trade union movement to be armed with a socialist economic alternative and a working class political alternative. Without this the PSA leadership capitulated to the logic of capitalism, saying it wanted to “assist in uplifting the economy”, accepting the ruling class’s propaganda that this is incompatible with higher public sector wages!

Tensions

Despite their leaders, public sector workers have demonstrated their willingness to struggle again and again over the past year. That is why the negotiations were so protracted. It was no easy matter for the Fedusa and Cosatu leaders to capitulate. To give their planned capitulation an alibi, action was repeatedly called but then not organised. The purpose was to incrementally – step-by-step – take the fight out of their own members by repeatedly communicating their complete unwillingness to lead a serious struggle.

However, the Nehawu leadership has still found it impossible to sign the agreement. Fraught Provincial Congresses in the first half of this year reflected the irreconcilable contradiction between the union propping-up the ANC in government, only for it to attack Nehawu members’ pay and conditions. Nehawu has emerged as the new weakest-link in Cosatu. The capitulation of the pro-agreement union leaders has given the Nehawu leadership breathing space. However, that they have made it very clear they will not contemplate a strike de facto puts the leadership in the pro-agreement camp.

Cosatu members will be asking anew what the point of the federation is when its affiliates are incapable of maintaining unity in the face of the same employer. It seems increasingly unlikely that Cosatu can survive the next two rounds of the assault on public sector pay in its present form.

The leaders of the Fedusa-affiliated unions, especially the PSA, will also not escape unscathed. In the course of June PSA members returned a ballot in favour of strike action! The PSA leadership claim the tiny increase in the cash allowance offered by the government, plus concerns about the third wave of the pandemic, the deteriorating economy, and even the riots, changed their members’ minds about a strike! In reality the PSA leadership conducted a campaign of fear further reinforcing the message that it was unwilling to lead a serious struggle. We are very curious to see how the “consultation” over-turning the strike ballot was conducted.

Saftu

Nevertheless, this wage agreement is more of a serious setback than an outright defeat. It is entirely possible to recover from it. The wage demands may not have been met. But the unions have broken the prison of multi-term agreements. The next round of negotiations will begin in just a matter of months. Preparations must begin now. The ConCourt must be placed under pressure when it sits later this month, through for example picketing.

When the next round of negotiations begins the ANC-government will be just as intransigent. Every single one of the arguments that the Fedusa leadership in particular used to justify their capitulation – the state of the economy, the pandemic, the damage of the riots – will still apply. What will make the situation different this time around? Public sector workers must prepare for fresh betrayal.

Saftu is the only trade union federation that was united in its refusal to sign the wage agreement. However, Saftu’s public sector unions are a small minority in the PSCBC. Withdrawal from the PSCBC and embarking on a minority strike – the only remaining option for the Saftu unions – would not be tactically wise at this stage.

Instead, Saftu affiliate Nupsaw’s call for public sector workers to “unite in preparation for the next wage negotiation … to avoid history repeating itself” must be turned into a serious campaign. In May, following the deadlocking of negotiations, Saftu said “…we are mobilising our members to prepare for the inevitable protracted general strike.” However, we are not convinced that any serious efforts were in fact made. Therefore, to avoid history repeating itself, Saftu must have a programme to mobilise public sector workers beyond its own ranks. Saftu must make a direct appeal to the Fedusa and Cosatu members over the heads of their leaders. We have been calling for the adoption of such a campaign for nearly two years.

Saftu members should take the lead in initiating strike preparation committees in every area. These should bring together the shop stewards and the rank-and-file of all public sector unions. Such committees should reach-out to local government workers, workers in the SOEs, and workers on the different EPWP programmes. “An injury to one is an injury to all!” must be the basis of an appeal to private sector workers and communities, clearly linking the government’s slashing of public spending to the dire state of service delivery. A programme of public meetings in working class communities and private sector workplaces would be important to popularise this message. The need for a workers’ party must be raised and built into the preparation of a public sector strike in 2022. This needs to include support for the naming of a launch date at the upcoming Working Class Summit.

It is possible that over the coming months, Cosatu, Saftu, or both, may call another Section 77 ‘general’ strike. This must be used as a rallying point to prepare the working class for the next round of the public sector pay battle. A defeat for the public sector workers in the remaining two rounds will be a defeat for the entire class. If the ANC-government succeeds in its R303 billion theft it will be a green light to the employers in local government, the SOEs and the private sector bosses too. To avoid this the lessons of the pro-agreement union leaders’ capitulation must be drawn now and used to guide the building of a campaign to ensure that it never happens again.

---

[1]Garth Theunissen, “Lowest-paid Public Servants Get Offer of Effective 11.7% Pay Rise”, BusinessLive (4 July 2021)

[2] Figures from “CPI Inflation Edges Lower in June” (21 July 2021), StatsSA

[3] Figures from “Inflation for 2020 was the Lowest in 16 years and the Second Lowest in 51 years” (20 January 2021), StatsSA, and, “The 2021/22 NERSA-approved Average Price Increase”, Eskom.

[4] Ray Mahlaka, “Government Sweetens Compensation Offer (again) for Public Servants in Bid to Break Impasse Over Salary Increases”, Business Maverick (4 July 2021) and “Unions Embrace Reality”, BusinessLive Editorial (29 July 2021).