Counting the fiscal cost of Cosatu: where will we find R8.5bn?
Cosatu's public sector wage demands are unreasonable, unaffordable and would cost South Africa an additional R8.5bn.
If this amount was funded by debt it would increase our budget deficit to almost 5% of GDP, even as economic growth remains weak. If it was funded by tax increases it would cost each South African taxpayer R1809 - money that is not reflected in the value each citizen receives from the public service.
In this year's Budget the Finance Minister set aside a cost-of-living adjustment of 5%, which the State has already exceeded with an offer of 6,7%. For Cosatu to hold out for a blanket 6.9% seems unreasonable, especially given that inflation is forecast to average 5.8% a year for the next five years.
These hikes will come on the back of five years of above-inflation increases, with the government wage bill increasing at twice the rate of inflation between 2008 to 2010.
This trend has seen us shift spending away from productive items like infrastructure, which this year gets R71bn, and towards employee compensation which gets five times as much at R371bn - or 39% of government operating expenditure.