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Good news for all public workers as Ramaphosa revealed this.


Previous money service Tito Mboweni's unpopular decision to impose a three-year compensation freeze for SA's 1.2 million community workers is starting to pay dividends, as the National Treasury gains momentum in stabilizing its compensation consumption in the public sector. 

Pay for community workers is the single largest component of the public authority's total consumption, accounting for R665.7 billion in the 2021/22 fiscal year, or 35 percent. The government is devoting a significant portion of its budget to repaying only 2% of the population in South Africa. 

According to the 2021 Medium-Term Budget Policy Statement (MTBPS), the cost of compensating local authorities will reduce from R665.7 billion in fiscal year 2021/22 to R665.2 billion in fiscal year 2022/23, then to R656 billion in fiscal year 2023/24. Then, in 2024/25, the cost will rise to R685.1 billion since some municipal authorities will quit to prepare for their annuity benefits to be paid out. 

The usual development in the public authority's use to compensate local officials is expected to be 1% for a long time (from 2021 to 2024), which is a considerable improvement over recent years when the typical development was over 5%. 

Enoch Godongwana, Mboweni's replacement, has been accused of being unyielding with worker's organizations addressing local politicians by ignoring their pleas for inflation-busting salary increases. 

Mboweni and his Cabinet colleagues recently signed a one-year salary raise agreement to settle a dispute with labor unions, who had rejected recommendations for a three-year wage freeze. For the year 2021, community workers were given a 1.5 percent pay raise, as well as a monthly cash remittance of between R1,220 and R1,695. 


This sliding structure ensured that all local authorities had R1,000 in their pockets each month, regardless of their salary level or the number of years they had volunteered. The 1.5 percent pay raise had been planned at the time, but the money remittance had not. It was just another cost at the end of the day. 

According to the MTBPS, the monetary compensation is expected to cost the government R20.5 billion in 2021, which is now remembered for the total pay cost of R665.7 billion. The real cost of money remittance is much higher than initial estimates, with the Treasury putting the cost at R18 billion. Treasury will take money from the Infrastructure Fund to subsidize the money remittance. The Infrastructure Fund is a government initiative to fund framework undertakings to develop the economy and create jobs. 

Godongwana is currently facing two big challenges in keeping up with the public area compensation bill's security. 

The next round of payment arrangements for 2022 between the government and labor unions is due to begin in November, and a standoff is expected. Workers' organizations plan to bargain hard for a common cost for basic products pay increases in 2022, and possibly grant monthly cash leniency as a standard thereafter. 

The Treasury has demonstrated in the MTPBS that money recompense may become a standard in the future. It has made initial provisions for an additional R20.5 billion in spending for money recompense if a compensation agreement with worker's guilds is not reached by 2022. However, another threat is looming that could derail Godongwana's efforts to reduce the public sector compensation bill in order to manage the state's growing debt and spending. 

Worker's guilds have taken the public authority to the Constitutional Court to compel it to carry out compensation increases of over 5% in 2020, which were guaranteed by the public authority but rarely implemented. The previous court (Labor Appeal Court) effectively applied in the approval of the public authority, stating that it could not carry out compensating builds that were not acceptable in any case. Workers' organizations are protesting the decision. 

If the Constitutional Court rules in favor of worker's organizations, the public authority will be forced to pay local politicians 2020 compensation increments retrospectively. This is a massive bill that the government must pay despite its inability to cover the costs. 

The MTBPS observed that a court ruling in favor of labor unions would "change the financial structure," as the government would be forced to reduce the size of public assistance (possible savings) while increasing its acquisition requirements. DM/BM

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