CoJ defends R10bn wage deal despite National Treasury’s ire

The City of Johannesburg (CoJ) says it’s optimistic it will avert a worst-case scenario that would see National Treasury further slash the hobbling metro’s funding, as the country’s most critical municipality remains under the microscope.

This is despite what appears to be defiance against Treasury’s orders to scrap a hefty wage deal with the South African Municipal Workers’ Union (Samwu).

The city’s decision to dig in its heels can also be read as an attempt to manage a labour crisis.

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In April, Finance Minister Enoch Godongwana put the CoJ on notice over the R10.3 billion wage agreement initially signed in 2025, calling for the city to halt the “unaffordable” deal or risk a squeeze on funding from government in the upcoming July allocation.

A delegation of city officials appeared before parliament’s Standing Committee on Public Accounts (Scopa) on Tuesday, including Mayor Dada Morero, city manager Floyd Brink and CFO Tebogo Moraka, addressing a range of financial and operational issues.

During the sitting, the officials told members of parliament that walking back the wage deal was not on the cards. Instead, the city would strike a delicate balance between “justice” for municipal workers and protecting the city’s coffers.

“If you do not deal with them, it obviously would lead to performance issues by the employees, so you need to then strike a balance in terms of making sure that the agreement is signed, but also that in paying the agreement, you do not deplete the city’s resources,” said the city’s group head of legal and contracts Mbulelo Ruda.

Morero also defended the controversial politically facilitated agreement (PFA), which tied the metro to minimum payments of R1.2 billion by March 2026, R5 billion by July 2026, and R4.1 billion by July 2027.

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“We went through a process with National Treasury to explain the PFA, and we went to an extent to explain what the agreement entails, and part of the agreement is that this will be subject to [the] availability of [a] budget, but the matter remains that the PFA must be dealt with and concluded,” Morero said firmly.

He did, however, add that Samwu had been cautioned that the deal could be deferred in the absence of funds.

The Joburg city council is expected to sit on 24 and 25 June to table interventions to reduce unauthorised, irregular, fruitless, and wasteful expenditure.

Once approved by the council, the city says the report will clear the path for the full July tranche of equitable share allocation, “and nothing to be withheld”, as it was in December.

Distressed entities

Although bullish about the municipality’s recovery, the city’s officials have again had to concede to deep-seated challenges at its various entities.

Brink said the cash position of City Power, among others, keeps him up at night. But he has vowed to strengthen oversight to prevent a further decline in service delivery.

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City Power, which is on the back foot in terms of revenue collection, recently signed a deal with Eskom to manage its ballooning debt, which exceeds R5 billion.

But the money owed to Eskom is only a portion of the metro’s total creditor bill, and its liquidity challenges raise further concerns about its ability to stay afloat.

As of the end of May, the outstanding balance to creditors is R7.5 billion.

Brink says efforts are underway to improve the city’s going concern.

“Once we sort that out, we will be able to look at our financial ratios. There are several turnaround and remedial plans that we have in place.”

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