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Moneyweb reports that the City of Tshwane on Tuesday afternoon announced that it would be implementing the bargaining council ruling made the previous day and pay – retrospectively – the 3.5% wage increase its staff was entitled to in 2021/22.
This means the city must find at least R2 billion to foot the bill that is payable in the next six months, according to the ruling. Leon Claassen of Ratings Afrika pointed out that this was a huge setback for the city, which had started making modest progress towards financial recovery. He noted that the city’s financial statements for 2023/24 showed a liquidity deficit of R9.7 billion. It did record a R500 million operating profit, but that is not enough to now fund the backdated salary increase. “Tshwane is in a deep hole that it must dig themselves out of. The outlook is dark, and I cannot see it improving soon. The city has no cash reserves and who will lend them money? Banks consider cash and cash reserves … It will impact the city’s whole financial situation. The liquidity shortage will increase, and service delivery will remain poor,” Claassen commented.
Making the announcement, Deputy Mayor Eugene Modise said the city would engage the unions “to explore practical, convenient, and sustainable modalities for implementing the award”. Following the ruling, the DA called it legally flawed and financially ruinous. The party stated: “If not taken on review, the decision will be paid for by residents in the form of deteriorating service delivery and infrastructure.”
- Read the full original of the report in the above regard by Antoinette Slabbert at Moneyweb
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