Commitment from Minister Mboweni on public sector wage bill a huge win for provinces  

4 February 2021

We received a letter from President Cyril Ramaphosa on 15 January 2021, in response to the section 79 petition that the Premier and I submitted in November last year, which includes confirmation from the Minister of Finance, Tito Mboweni, that if national government lose the appeal by the public sector unions before the Constitutional Court, and the public sector wage agreement is implemented, they will cover the increase in the cost of compensation of employees in provinces, including the Western Cape.  

We consider this commitment to be a huge win for provinces because it mitigates a significant fiscal risk, which was transferred to provinces by National Treasury.

During the Medium Term Budget Policy on 28 October 2020, it was confirmed that the Western Cape Provincial Budget would be pre-emptively cut by R2.396 billion in the 2020/21 financial year for compensation of employees following National Treasury’s decision to freeze wages. 

This commitment to refund provincial budgets is particularly important given that the public sector unions were, just last week, granted leave to appeal this matter in the Constitutional Court. It is also important, as at present such wage increases do not form part of the current budget allocations made by national government. 

More specifically, in the letter, Minister Mboweni wrote: “Furthermore, I wish to state that if the court orders the collective agreement be implemented, or a settlement agreement that requires that additional funding is reached, National Treasury will make recommendations to Cabinet for the introduction of the required draft legislation in Parliament to provide for such funding.” 

We now have the clear commitment we asked for, that should the public sector unions win their appeal on the wage agreement, funding will be provided by National Treasury.   

While we support the overall objective of decreasing the public sector wage bill, our view remains that the in-year approach is unconstitutional. 

Which is why Premier Alan Winde and I submitted a section 79 petition to President Cyril Ramaphosa to bring to his attention material concerns over the constitutionality of certain aspects of the 2020 Division of Revenue Second Amendment (DoRA 2) Bill which was passed by Parliament on 26 November 2020. 

While we welcome this confirmation from Minister Mboweni, we do still require clarity on the R557 million additional budget cut which was imposed on the Western Cape and which does not align with our Cost of Employment calculations. We have tried to resolve this through numerous technical engagements to no avail. 

I have therefore written once again to Minister Mboweni to request an urgent resolution to this matter.

Issued by Francine Higham, Spokesperson for the Provincial Minister of Finance and Economic Opportunities(Responsible for the Provincial Treasury and the Department of Economic Development and Tourism), 4 February 2021