The decision by the SA Local Government Bargaining Council to award backdated salary increases to officials of the City of Tshwane is not only legally flawed – It is financially ruinous. If not taken on review, the decision will be paid for by residents in the form of deteriorating service delivery and infrastructure.
Earlier this year the City of Tshwane won a case in the Labour Court against paying 5,6% salary increases for the 2023/24 financial year on the grounds of affordability. The Court held that the Bargaining Council had misdirected itself in finding that Tshwane could afford to pay these increases.
Affordability was the basis on which the council approved the exemption application in 2023, with the supporting vote of the ANC and ActionSA. The resultant saving of R600 million enabled the City to reach a favourable payment arrangement with Eskom – bulk electricity purchases being the second biggest operational expense of any municipality next to salaries.
In the same judgment, the Labour Court also made a decision about a 2021/22 application to be exempted from paying salary increases of 3,5% in that year. The Court remitted the decision about the 2021/22 increases back to the Bargaining Council, which in 2022 refused to hear the City’s case.
Today, the Bargaining Council returned its verdict, rejecting the City’s exemption application. The award means that the city will have to pay backdated salary increases of 3,5%.
What will that cost the city? On a conservative estimate at least R1,4 billion once-off, without taking into account the escalation in benefits that have been approved in the succeeding financial years. In addition, the City will have to find about R400 million extra in every succeeding financial year beyond the baseline payout.
The commissioner who made the award concedes in his ruling that the financial implications of awarding a backdated pay increase of 3,5% will be “very huge”, and on this basis gives the city six (6) months to implement the award.
But the reasons provided for the award lack the most elementary assessment of whether the City is actually able to afford a R1,4 billion expenditure in the next six months. In fact, the entire decision seems to have been taken without regard to the City’s current financial position.
The DA believes that, as with the incompetent decision of the Bargaining Council to approve the 2023/24 exemption application by Tshwane, the City has strong grounds to take the decision about the 2021/22 salary increases on judicial review to the Labour Court. Failure to do so would derail the City’s entire financial recovery process. In the meantime, the DA will write to Tshwane City Manager Johann Mettler to publish the City’s exact assessment of the costs of implementing the latest bargaining council award, a fact which will confirm that the backdated salary increase is completely unaffordable and places the financial sustainability of the municipality in serious jeopardy.