President Cyril Ramaphosa is meeting with organised labour Tuesday, to discuss the possibility of a further wage freeze, job cuts, and more cuts to government services.

It comes after Treasury recently proposed harsh cuts to national and provincial budgets.

Ramaphosa reportedly met with Finance Minister Enoch Godongwana at a wine farm in Stellenbosch last week to discuss the current fiscal crisis and discuss these cuts.

Cosatu’s spokesperson Matthew Parks say they are deeply concerned at what is calls ”shocking” proposals.

The Federation is shocked Treasury has tabled proposals to close various departments and key government programmes, reduce the public service headcount by 200 000 and raise VAT by 2%, in addition to freezing vacancies and suspending infrastructure investments.

Parks says while Cosatu appreciates the real fiscal constraints facing the state and the need to cut fat and reprioritise expenditure, the suggestions offered by Treasury of slashing expenditure will only serve to choke the economy and further weaken government.

If government wants to cut wasteful expenditure, then it needs to reverse the offensive increases it has given to Members of Parliament and the Legislatures earlier this year and just 2 weeks ago to Councillors.

Cabinet can abandon the litany of perks it feels entitled to. Government should slash the number of Ministers from 28 to 20 and Deputy Ministers from 34 to 5 as well as the 10 000 Councillors loitering about dysfunctional municipalities.

Cosatu says government needs to urgently address the following:

• Provide additional support to Eskom to reduce and end loadshedding and ensure reliable and affordable electricity.
• Urgently intervene at Transnet and Metro Rail to secure and rebuild our freight and passenger railway network and modernise our ports.
• Stabilise and overhaul dysfunctional municipalities and restore basic services communities and businesses depend upon.
• Allocate additional resources to the South African Revenue Service to tackle tax evasion and customs fraud, and conduct lifestyle audits on the wealthy, and thus generate badly needed state revenue.
• Fill critical frontline service vacancies in the public services, especially the Police, National Prosecuting Authority and Courts, enabling them to crack down on crime and corruption.
• Give relief to commuters and the economy by reducing the taxes currently consuming 28% of the fuel price and place the chaotic Road Accident Fund under administration to lessen its need for fuel levy hikes.
• Expand the Presidential Employment Programme to accommodate 1 million active participants by October’s MTBPS and 2 million by February’s budget speech to help young people earn a salary, gain invaluable experience and enter the labour market.
• Enhance the invaluable Social Relief of Distress Grant to recover value lost to inflationary erosion by raising it to the Food Poverty Line and link it recipients to skills and job opportunities.
• Expedite and not freeze the badly needed infrastructure investment programme.

Parks says if government can show the necessary fortitude and vision and implement these common-sense interventions, the economy can return to growth and soon meet the 4% growth target.

Economist at the Efficient Group Dawie Roodt says the biggest problem is that the repayments on huge state debt – and with that increasing interest on those repayments – is taking the biggest cut of state expenditure.

He says the country is between a rock and a hard place, and there are no easy choices to make.

”What needs to happen is one of two things – the State must somehow find more money, that means an increase in taxes, which is going to be extremely difficult to do because the economy is over-taxed as it is…Or the State needs to cut back on State spending, which is also extremely difficult to do, because there is an election around the corner, and politicians don’t like to cut back on spending, especially when there is an election looming.”