NC municipalities unable to pay salaries

The South African Municipal Workers Union (Samwu) has demanded that national Treasury release emergency funds to all defaulting municipalities so that outstanding salaries could be paid and that workers receive additional compensation for the financial hardships endured by these delays.

An advisory was sent out on Monday, informing Thembelihle municipal employees that the payment of March salaries would be delayed, due to financial constraints and non-payment of the equitable share that impacted its cash flow. 

According to correspondence from national Treasury, the municipality adopted an unfunded budget, while there was a persistent breach of finance regulations to settle payment to service providers and bulk suppliers within the 30 day period, that hampered the proper functioning of the municipality. 

A final written warning was issued by Treasury to  improve debt collection and reduce expenditure failing which, it could be taken to task for misconduct and breach of the Municipal Finance Management Act (MFMA).

DA spokesperson for Cooperative Governance, Human Settlements and Traditional Affairs (Coghsta) Gizella Opperman said letters were also issued to employees of Renosterberg and Thembelihle municipalities on March 19 and March 24, warning them that that salary payments would not be processed on time, as they had not received their equitable share allocations.

She added that national Treasury informed !Kheis municipality on March 4, that the transfer of equitable share and conditional grant allocations would be halted due to their "persistent failure" to pay creditors within 30 days of receipt of their invoices. 

"This includes its failure to pay SARS and the Pension Fund, with arrear payments totaling R3,8 million and R29,4 million respectively."

Samwu demands compensation for non-payment of salaries

South African Municipal Workers’ Union (Samwu) General Secretary Dumisane Magagula, expressed outrage over the failure of municipalities across the country to pay workers’ salaries.

“This crisis has escalated to catastrophic levels and represents nothing short of economic violence against municipal workers.” 

He indicated that Thembelihle and !Kheis municipalities were left in financial ruin and unable to meet their constitutional obligations when it did not receive its equitable share.

“National Treasury has ruthlessly imposed draconian austerity measures and unfunded mandates on municipalities.” 

He added that dedicated municipal workers, who were already overburdened and underpaid, were now being forced to work without salaries while service delivery worsened. 

Magagula stated that municipalities including three municipalities in the Northern Cape were also deducting workers’ contributions for medical aids, pension funds, funeral policies, and union subscriptions, without paying it over to third parties. 

‘Gravely ill workers are denied critical healthcare as their medical aid coverage lapses and grieving families facing the unbearable indignity of being unable to bury loved ones.

“Workers are losing out on the interests that would have accrued if their pensions.” 

Thembelihle municipality says salaries were processed 

Thembelihle municipal manager Kealebogo Gaborone indicated that while the equitable share had not been received on March 12 as expected, coupled with overall cash flow challenges, salaries were paid for December, January and February and March. 

“Following engagements with national Treasury, the equitable share was paid on March 26 and all salaries were subsequently paid on the same day.” 

She added that the municipality was struggling financial due to a low revenue base and a persistent culture of non- payment.

"This makes it difficult to pay its creditors within the prescribed period.  Despite these challenges, medical aid contributions for employees are up to date. Payment arrangements have been concluded and engagements are underway with major third-parties such as Eskom, Auditor General and the Water Board. Provincial Treasury, Coghsta and the South African Local Government Association (Salga) were informed about the challenges faced by the municipality.” 

Gaborone stated that active engagements were ongoing with the national and provincial government to explore possible interventions to stabilise the municipality’s financial position.

“In the meantime, several corrective measures have been implemented to improve debt collection and reduce expenditure. The municipality remains committed to working towards full compliance of the MFMA, legislative provisions and ensuring financial sustainability.”

Provincial government commits to intervene

The MEC for the Department of Finance, Economic Development and Tourism Venus Blennies-Magage during her budget speech this week stated that provincial Treasury would consider offsetting the equitable share of departments, to pay municipalities directly. 

She expressed concern over the non-payment of municipal pension fund contributions that constituted a “serious breach of compliance”.

“This is not only unethical but also illegal, as it involves funds already deducted from employees. Such violations can be reported to the South African Police Service and criminal charges may be laid against responsible individuals.” 

She indicated that active steps would be taken against the municipalities in the province that were non-compliant. 

“Provincial government has engaged with all affected pension funds and is ensuring that payment arrangements are in place. Strict monitoring mechanisms, including verification of proof of payment, have been introduced to prevent defaulting on these commitments.” 

Blennies-Magage assured retiring municipal workers and those who wished to access the two-pot retirement system, that they would be able to access their benefits, without delay. 

“Provincial government remains committed to supporting municipalities in strengthening financial management. This includes implementing strong internal controls, ensuring accurate and secure financial records, filling critical positions such as municipal manager and chief financial officer, and enhancing overall oversight and compliance.”