Government wage challenges unite cronies and transformation beneficiaries
7 November 2019
Equitably transforming SA’s economy is necessary but this goal has been excessively prioritised to the point that neither the recent national election nor its aftermath could produce a workable growth plan. Efforts will now shift toward fixing government’s unaffordable wage bill. This will reveal how ill-conceived transformation policies and patronage have become mutually reinforcing.
Losing investment grade credit status reflects serious economic deterioration. If however, “at-risk factions” exploit government’s unaffordable wage bill by igniting industrial actions and rioting, SA’s prospects for achieving broad prosperity could slip very far into the future. This would constitute historic failure.
“At risk factions” include cronies and vulnerable beneficiaries of transformation efforts. Conniving cronies can no doubt imagine scenarios whereby mayhem undermines the Ramaphosa faction’s wobbling credibility to the point that his leadership can be challenged ever more aggressively. Ramaphosa’s political clout is already waning as he can’t devise plans to fix the economy or Eskom or SAA, etc.
Efforts to constrict government’s wage bill will drive union leaders and members to align with cronies. Avoiding lay-offs means meaningful savings would need to come from below inflation wage increases. The vast majority of SA households are either poor or heavily indebted. Excessive consumer debt loads, with interest rates much higher than inflation, helped spawn the recent bill providing debt relief.