KZN budget crunch means government will have to review Cosatu relationship

Mark Steele, MPP

Democratic Alliance KZN Scopa Spokesperson

A decision with huge implications for KwaZulu-Natal’s provincial government and its proposed 2013/14 budget will be made when the national government and the public sector unions face up over wage negotiations later this year. After years of real increases in budget spending on the public sector a budget crunch has now hit treasury officials both in Pretoria and here in the provincial capital. In real terms the KZN budget currently under discussion will increase by less than 1% and it is anticipated to shrink by about the same percentage in 2014/15.

This budget flat-lining will mean that government has to make some difficult decisions over the way it handles its alliance partner Cosatu in future wage discussions. There are in essence three scenarios on the table. The first is the rational option – hold public sector increases to the bare minimum and allow natural attrition to keep the sector’s overall wage bill within current budget constraints. The alternative is to keep wage increases at the potentially unsustainable levels of recent years. This option has two potential consequences. Either there will be extensive staff lay-offs or – a more likely scenario – reductions in service delivery expenditure on infrastructure and services. Either option could have uncomfortable political consequences in the year preceding the next election, and while we here in KZN will have little say in the final wage settlement, we will nevertheless have to live with the consequences.

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