Bloated salary bills a thorn in FS municipalities’ side

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Bloated salary bills continue to be a thorn in Free State municipalities’ already ailing side.

It has been revealed during a presentation by the Provincial Department of Cooperative Governance and Traditional Affairs (Cogta) to delegates of the National Council of Provinces (NCOP) in Bloemfontein today, that the annual salary bill of municipalities has escalated to such an extent that the cost of employment exceeds the equitable share allocations for municipalities.

Cogta Deputy-Director Sipho Thomas tells those present, including members of the provincial legislature, that municipalities’ inability to sustain these annual salary bills is evidenced by the fact that a substantial number of municipalities in the province struggle to pay over salary deductions to third parties, including pension funds, medical aid schemes and insurance companies. Thomas cautions that failure to do this constitutes criminal conduct on the part of the municipality and has resulted in mass demonstrations and litigation.

On Monday 16 September 2019, the OFM News team reported on such a matter between Kopanong Local Municipality and the Municipal Workers’ Retirement Fund, formerly known as the South African Municipal Workers’ Union (Samwu) National Provident Fund, regarding the November 2018 High Court order that blocked an auction of Kopanong’s assets at the eleventh-hour. It has been reported Kopanong owes this third party over R2 million. The financially strained municipality is alleged to owe its third parties close to R80 million collectively, resulting in the suspension of medical aid cover for some employees and delays in pension fund payouts. The Free State High Court Judge, Johannes Daffue, stressed in proceedings on Monday that Kopanong “is liable criminally for not paying over pension fund contributions” and he is at a loss as to why no criminal action has been launched, despite the matter being reported to authorities.

In June 2019 Finance MEC, Gadija Brown, told media attending a briefing marking her first ten days in office, that government is top heavy when it comes to the compensation of employees and if the government takes on more people, the lack of services will increase,” she warned.

The effect of the bloated salary bill on the provision of services can be seen in presentations given today, which paint a bleak picture of the current state of Free State municipalities. Money owed to creditors remains a serious concern and poses a challenge to the provincial government. Money owed to creditors has increased to R15,2 billion in 2019 from over R10 billion in 2018.

OFM News/Olebogeng Motse