Council considers impact of labour costs on IUDG-funded projects
George Municipality Council has approved and adopted its Consolidated Capital Expenditure Framework (CEF) for 2026/2027, which will guide how the Municipality plans and prioritises its infrastructure projects.
During the discussion, of the item in a Special Council sitting online on 28 September 2026, Council also considered the cost of employing workers on projects funded wholly or partly through the Integrated Urban Development Grant (IUDG).
Acting Municipal Manager Dean O’Neill said the Municipality must carefully balance the need to create employment opportunities with the need to ensure that grant-funded infrastructure projects are delivered within their available budgets.
“Grant funding is limited and needs to be used carefully. If the cost of a project increases, there is less funding available for the project itself and potentially fewer people can be employed during the construction phase,” said O’Neill.
He said the Expanded Public Works Programme (EPWP) also provides an opportunity for more people to benefit from temporary work and earn an income while projects are being implemented, at the applicable EPWP rates.
“Our responsibility is to make sure that the funding is used for the purpose for which it was provided, while creating as many work opportunities as possible and delivering the infrastructure that communities need,” he said.
It was also noted that the Municipality cannot determine the wages that independent contractors pay their employees beyond the requirements of applicable legislation and the conditions contained in the relevant contracts. Contractors remain responsible for complying with labour legislation and applicable wage requirements.
As part of the discussion on Item 4.11, the Patriotic Alliance put forward a counter proposal relating to wages on IUDG-funded Civil Engineering projects.
The counter proposal was proposed by Cllr Raphael Goeieman and seconded by Cllr Marcell Kleynhans.
It proposed that workers on Civil Engineering projects funded wholly or partly through the IUDG be paid at applicable industry-related wage rates, in accordance with the National Minimum Wage Act, Basic Conditions of Employment Act and applicable Bargaining Council agreements or Sectoral Determinations.
The proposal also called for these requirements to be included in IUDG applications, project budgets, tender specifications and contractual conditions. It further proposed that the Municipal Manager or delegated officials monitor contractual compliance, while the Department of Employment and Labour remains responsible for enforcing applicable labour legislation and wage determinations.
While the proposal may seem to be beneficial on the face of it, the unintended consequences are not and Council considered the proposal against the available funding for infrastructure projects, the potential impact on project costs and the number of people who could be employed during the implementation phase.
The CEF brings together the Municipality’s infrastructure needs, spatial planning and available funding. It is aligned with the Integrated Development Plan, Municipal Spatial Development Framework and budget, and supports the Municipality’s requirements for accessing and retaining IUDG funding.
Projects are considered according to factors such as service backlogs, growth, infrastructure needs, affordability, technical readiness and the potential social and economic benefit.
The CEF does not approve funding for individual projects. Projects still have to go through the annual budget process and can only proceed once funding has been approved and is available.
O’Neill said the CEF gives the Municipality a clearer basis for making decisions about where limited capital funding should be directed.
“We need to make sure that the money available to the Municipality is used where it can have a meaningful and lasting benefit for residents. That means looking not only at the immediate cost of a project, but also at the infrastructure we are able to deliver and maintain over the longer term,” said O’Neill.